Venture Capital Intelligence Report
February 22, 2026 • Synthesizing insights from top-tier VCs
VCs are increasingly selective as AI hype meets reality checks. Focus shifting from foundation models to application layer and infrastructure efficiency. Public market volatility (VIX down to 19.09) suggests stability but valuations remain compressed from 2021 peaks.
Bifurcated market: AI and enterprise software seeing robust funding at reasonable valuations, while consumer and fintech face continued headwinds. LPs demanding clearer paths to profitability.
Seed/Series A normalized but still 30-40% below 2021 highs. Growth rounds down 50%+ as public comparables remain volatile. Quality companies with strong unit economics commanding premium multiples.
The 'picks and shovels' play for AI gold rush. Every enterprise needs AI infrastructure stack - compute optimization, model management, data pipelines, monitoring.
AI-native software eating traditional vertical SaaS. Domain-specific models showing superior ROI vs horizontal tools.
Beyond copilots to autonomous agents that execute complex workflows. Early innings but massive productivity unlock potential.
IRA and European Green Deal creating massive tailwinds. Industrial decarbonization becoming economically viable at scale.
AI-powered development tools driving 10x productivity gains. Every developer workflow being reimagined with AI assistance.
Embedded finance and real-time payments creating new infrastructure needs. Regulatory clarity improving investment thesis.
The intersection of technology and policy creates massive market opportunities. Government spending on modernization reaching inflection point.
Generic LLMs will commoditize, but companies with unique data assets and domain expertise will capture disproportionate value.
Climate solutions are becoming economically superior to traditional alternatives, not just environmentally necessary.
Every part of the software development lifecycle is being reimagined with AI assistance, creating opportunities for new category leaders.
Autonomous AI systems that execute complex business processes end-to-end, beyond simple task automation
LLMs reliable enough for workflow orchestration, RPA market matured creating integration foundation, enterprise desperately needs productivity gains
$200B+ market as agents replace human workflows in knowledge work
Early signals from: a16z, General Catalyst, Benchmark
Companies to watch: Adept, Sierra, Relevance AI
Nation-state level AI capabilities and infrastructure to reduce dependence on US hyperscalers
Geopolitical tensions, data sovereignty concerns, European AI Act creating regulatory framework
€100B+ in European investment alone through digital sovereignty initiatives
Early signals from: Index, Accel, General Catalyst
Companies to watch: Mistral AI, Aleph Alpha, H Company
Intersection of AI, synthetic biology, and computing creating new paradigms for drug discovery and manufacturing
AI models now capable of protein folding prediction, synthetic biology tools democratized, compute costs declining
$500B+ transformation of pharmaceutical R&D and manufacturing
Early signals from: Kleiner, a16z, General Catalyst
Companies to watch: Zymergen, Ginkgo Bioworks, AbCellera
AI systems that control and optimize physical industrial processes in real-time
IoT sensor costs plummeted, edge computing matured, industrial companies facing efficiency pressures
$150B+ in industrial automation and optimization
Early signals from: Bessemer, Lightspeed, Kleiner
Companies to watch: Hadrian, Path Robotics, Veo Robotics
Previous: Red hot in 2020-2022 with massive rounds → Now: Significantly cooled
User acquisition costs skyrocketing, iOS privacy changes impact, market saturation, difficult monetization in current macro
What Changed: Post-pandemic normalization + higher cost of capital making growth-at-any-cost models unsustainable
VCs Cautious: Benchmark, Lightspeed, General Catalyst
Previous: Massive interest 2020-2022 → Now: Selective interest only
Regulatory uncertainty, institutional adoption slower than expected, infrastructure matured but applications lagging
What Changed: Focus shifted to crypto-enabled applications vs pure DeFi protocols. Institutional adoption requirements more complex.
VCs Cautious: Sequoia, Kleiner, Greylock
Previous: Pandemic darling with easy growth → Now: Challenging environment
CAC inflation, supply chain issues, return to physical retail, challenging unit economics at scale
What Changed: iOS 14.5+ privacy changes destroyed Facebook ad targeting effectiveness. Physical retail recovery hurt pure-digital plays.
VCs Cautious: Bessemer, Accel, General Catalyst
Don't build your own foundation model unless you have truly unique data. Focus on fine-tuning and application layer differentiation.
💡 Start with existing models, invest heavily in data collection and curation, build defensible workflows and user experiences.
— Sequoia (Pat Grady)
Buyers are overwhelmed by AI pitches. Lead with specific business outcomes and ROI, not technology capabilities.
💡 Develop case studies showing clear productivity gains or cost savings. Offer pilot programs with measurable success metrics.
— Bessemer (Byron Deeter)
Top AI talent is getting equity offers from multiple companies. Compete on mission, learning opportunities, and technical challenges.
💡 Articulate compelling long-term vision, offer meaningful equity, create environment for publishing research and speaking at conferences.
— Greylock (Reid Hoffman)
Investors prioritizing capital-efficient growth over pure growth rate. Unit economics matter more than ever.
💡 Focus on improving LTV/CAC ratios, demonstrate clear path to profitability, optimize burn rate for 18+ month runway.
— Lightspeed (Jeremy Liew)
Series C • Lead: General Catalyst • Others: Lightspeed, Bessemer, Index
Validates continued investment in AI safety-focused foundation models despite commoditization concerns
Foundation ModelsSeries F • Lead: Accel • Others: a16z, Index, General Catalyst
Data infrastructure becoming critical bottleneck as AI adoption accelerates across enterprises
AI InfrastructureSeries D • Lead: Kleiner Perkins • Others: Bessemer, General Catalyst
Fusion energy reaching commercial viability timeline, massive climate tech validation
Climate TechAcquisition • Key investors: Accel, CapitalG, Kleiner Perkins
RPA companies consolidating as AI agents emerge - defensive acquisition by hyperscaler