In 2026, venture capital’s hunger for AI will be insatiable

For venture capital, 2025 was all about artificial intelligence—a trend that’s all but certain to carry into 2026.

More than half of all VC dollars—and 36% of total deals—now flow to AI companies, according to a recent Silicon Valley Bank report. Crunchbase recently reported that 14% of all global venture investment in 2025 went to AI giants OpenAI and Anthropic. The year also saw huge deals like a $2 billion seed round raise by Thinking Machines Lab, the AI startup founded by former OpenAI CTO Mira Murati.

AI deals are also often closing quickly, with investment rounds that once would have taken weeks to close being handled in a manner of days, says Tim Tully, a partner at Menlo Ventures. “You’re seeing people raise these large rounds with no decks, which is kind of shocking, or not even absolute clarity around precisely what the company is going to do,” he says. “You’re seeing funding of teams over what the team is doing.” 

But even amid speculation that the industry could be in a bubble—and some signs of public fatigue with the technology that’s snuck into everything from therapy sessions to children’s toys—investors and industry observers say the AI push will continue in 2026.  

TAM explosion

In some ways, AI mimics the investment wave around other recent transformative technologies, like the rise of the PC, internet, and mobile phone. “New technologies come, and they’re transformative, and that drives a lot of investment,” says Steven Neil Kaplan, a professor at the University of Chicago who studies venture capital. “Some of them work out, some of them don’t, and hopefully the world becomes more productive.”

But Michael Carmen, co-head of private investments at Wellington Management and the coauthor of a venture capital outlook report the firm released in December, says AI companies have recently been growing revenue at a historically fast rate—quicker than previous generations of software-as-a-service (SaaS) companies. Widespread internet use has given new AI products essentially instant access to a huge potential market, Carmen adds, noting, “When you think about the [total addressable market] of AI over the longer term, it could be the largest TAM of anything that we’ve ever seen in technology.”

AI is increasingly competing with traditional SaaS businesses for both customers and investors, says Saagar Bhavsar, partner at Begin Capital. For one thing, artificial intelligence has businesses wondering if it’s more viable to build software tools in-house with the aid of new coding assistants and other AI agents.

“If your cost of building the software and time of building the software is going close to zero, the whole idea of SaaS disappears,” says Sergey Gribov, general partner at Flint Capital. 

Even without AI, some companies have begun to reconsider the sprawling set of cloud services they’ve signed up for over the years, including deals they signed during the chaos of the pandemic shutdowns, Bhavsar says. And investors are taking note. “Few people are calling themselves B2B SaaS investors anymore, even if they did that historically,” he says.

Bhavsar says VC firms and their investors are showing an increasing appetite for new kinds of opportunities, including investments in computing hardware, data centers, physical computing, and robotics. There’s also a rising interest in so-called AI roll-ups, popularized by VCs like General Catalyst, where VC-backed businesses buy services businesses like IT companies, call centers, or accounting firms with the goal of making them more efficient through AI adoption. It’s historically more like private equity investment, but the tech tie-in has made it appealing to the VC world.

“The most interesting part right now is that any type of deal can be a VC deal,” Bhavsar says. “Any pitch can be a VC pitch if they pitch it right.” 

AI models, running on powerful graphics processing units like the ones that have helped chipmaker Nvidia’s market value skyrocket, could become the basis for a wide range of applications. (It’s similar to the wave of software developed atop Microsoft Windows and Intel chips in the PC era, suggests Carmen.) VCs are looking to invest in companies building those AI-powered apps, though they’re also still enthusiastic about the frontier labs developing the models and core technology that help AI process text, images, video, and sound. That market, after all, still sees fierce competition among companies like OpenAI, Anthropic, and Google, and new startup labs emerging like Murati’s Thinking Machines or Tokyo-based Sakana AI.

“I think there will be a lot more of these people coming out of the bigger names, or researchers coming out of academia wanting to start these research labs,” says Christine Tsai, founding partner and CEO of 500 Global. 

There’s also room—and VC appetite—for new, innovative AI models for other areas besides language and image processing, like autonomous vehicles and robotics. “We believe there’s going to be a company that’s going to build the robotic brain, if you will, that will power many different apps, many different use cases,” says Janelle Teng, partner at Bessemer Venture Partners. 

Fintech, defense tech, and the rest

Still, AI hasn’t completely captured the VC sector. Other areas seeing investor interest include fintech, particularly after the 2025 IPOs of companies like Klarna, Circle, and Chime, as well as space and defense tech, Teng says.

Space and defense startups also benefit from the Trump administration’s push to overhaul military procurement and move business away from big defense contractors, while fintech startups may take advantage of the administration’s deregulatory approach to finance.

VCs that in the past wouldn’t have invested in defense tech have also been encouraged by the success of Anduril, according to Carmen, who notes that another area of excitement for VCs is health tech, including wearable technology and other tools that help provide consumers with information to manage their health.  

One open question for VCs and other startup investors is whether the IPOs and acquisitions that characterized 2025 will continue into the new year. “There was a lot more activity and liquidity in the markets, and we saw it in our own portfolio, in contrast to years prior, where it was extremely dry and felt like things were still frozen,” Tsai says. 

A number of big startups are reportedly preparing for IPOs, including AI companies OpenAI and Anthropic and Elon Musk’s SpaceX. Their success could spur more initial offerings. Those transactions provide early-stage investors with funds for the next round of investment, though with big companies staying private for longer than in previous tech booms, there are often other ways to sell stock through company tender offers and other private deals. And, if recent activity is any indication, there’s no shortage of investor cash pursuing stakes in startups, particularly around AI. 

Only time will tell, of course, which of those investments will prove wise, and whether the ever-escalating valuations of so many AI companies will last. “The thing that’s hard to know is, are we in 1997, or are we in 1999,” says Kaplan. “VC investments in ’97 did very well. VC investments in ’99 did horribly.” 

source https://www.fastcompany.com/91465347/2026-venture-capital-artificial-intelligence-openai-anduril