Venture Capital Trends: Predictions for 2026 Funding Landscape

The venture capital landscape in 2025 marked a significant year of investment activity, ranking as the third-highest on record. In the first half of 2025, there was a notable 32% increase in venture investment compared to the first half of 2024, making it the strongest half-year since the first half of 2022. The third quarter of 2025 saw a 38% year-over-year jump in funding, with artificial intelligence (AI) investments accounting for nearly half of the total funding.

AI and Technology Sector Dominate

Artificial intelligence funding is expected to continue accelerating in 2026, reflecting its significant influence on the venture capital landscape. In 2025, AI funding reached approximately $11.8 billion, representing 64.9% of the total venture capital funding. This trend points towards a continued focus on AI-related innovations, with large raises being observed in growth and later-stage rounds.

Despite the impressive numbers, median valuations remained flat, with tighter investment terms being enforced. The seed and Series A stages were noted for aggregating the highest number of deals, while growth stages concentrated net new dollars. Additionally, there was an observed increase in funding for AI infrastructure and defense technology, contrasting with a decrease in the share of climate tech funding.

Shift in Regional Investments

Latin America experienced a surge in startup investment, climbing by 14.3% in 2025. The overall venture funding in the region reached $4.1 billion, up from $3.6 billion in 2024. However, this figure was less than half of the $8.4 billion recorded in 2022. Brazil raised $2.1 billion, marking a 10.5% increase from 2024, while Mexico saw a 53% increase in investment, raising $1.1 billion. Notably, Mexico surpassed Brazil in venture dollars during the second quarter of 2025, establishing itself as a growing hub for startups in the region.

The late-stage and growth deals in Latin America amounted to $1.63 billion in 2025, while early-stage investments totaled nearly $2 billion. The fourth quarter of 2025 witnessed a 112% increase in early-stage investment compared to the same period in 2024. Despite these positive trends, the total seed and angel investment experienced a 22% decrease, totaling $540 million in 2025.

Global Funding Trends

The global venture capital scene in 2025 saw a total funding amount of $18.2 billion across 409 deals, with an average deal size of $44.5 million and a median deal size of $7.5 million. Q1 2025 had the strongest startup funding since the second quarter of 2022, with a 49.2% increase from October 2025 and a 56.9% year-over-year increase from November 2024.

Mega-round funding, defined as investments of $100 million or more, totaled $7.8 billion across eight deals. The concentration of late-stage funding was significant, representing 70.6% of the total investment. San Francisco emerged as a key hub, recording 82 deals with a total funding amount of $6.4 billion, and 183 AI-related companies were funded.

Outlook for 2026

Looking ahead to 2026, venture capital fundraising is expected to remain comparable to the levels seen in 2025. The focus will likely shift towards revenue growth and operational efficiency among startups. With AI continuing to be a major driver of investment, the landscape is set to evolve with advancements in AI infrastructure and defense technologies.

While challenges remain, particularly in underinvested regions like Latin America, the opportunities for capitalization are significant. Mexico's emergence as a regional hub further emphasizes the dynamic nature of the global venture capital ecosystem. As data compiled up to January 4, 2026, suggests, the coming year will continue to be pivotal for investors and startups alike, with a keen eye on technological advancements and regional developments.