Venture Capital Intelligence Report
February 04, 2026 • Synthesizing insights from top-tier VCs
VCs see a bifurcated market - mega winners in AI/infrastructure pulling away while traditional SaaS faces compression. Flight to quality accelerating as public market multiples reset expectations.
Series A crunch continues with 60% fewer rounds than 2021 peak. Seed remains active but Series B+ requires clear path to profitability. Extension rounds at flat/down valuations common.
AI companies maintain premium multiples (20-40x ARR) while traditional SaaS compressed to 6-12x. Late-stage reset 40-60% from peak with new emphasis on unit economics over growth.
Building the picks and shovels for AI revolution - inference optimization, specialized chips, edge deployment, and developer tooling seeing massive demand
Purpose-built AI agents for specific workflows showing 10x productivity gains in legal, sales, customer support, and back-office operations
IRA funding creating massive tailwinds for clean energy manufacturing, battery tech, and carbon capture with government de-risking early investments
Banks finally modernizing core infrastructure creating opportunities for API-first banking, embedded finance, and compliance automation
Geopolitical tensions driving massive defense spending increases with focus on autonomous systems, space capabilities, and cybersecurity
Infrastructure layer still being built - biggest returns will come from picks and shovels companies enabling AI applications
Companies that build AI-native workflows from scratch will beat those retrofitting AI onto existing products
Government de-risking through subsidies and guaranteed offtake agreements makes climate manufacturing attractive to VCs for first time
Security tools built from ground up to defend against AI-powered attacks and secure AI systems themselves
Traditional security tools failing against sophisticated AI attacks; new threat vectors emerging from AI adoption
$50B+ market as every company becomes AI company
Early signals from: Greylock, Lightspeed, Index
Companies to watch: Robust Intelligence, Protect AI, HiddenLayer
Fully autonomous business processes across supply chain, finance, and operations with minimal human oversight
AI agents mature enough to handle complex multi-step business workflows reliably
$200B+ market replacing human knowledge work
Early signals from: Benchmark, General Catalyst, Accel
Companies to watch: Adept, Automation Anywhere, UiPath
Commercial space economy infrastructure including manufacturing, logistics, and services in orbit
Launch costs dropped 90%+ enabling new business models; government contracts providing early revenue
$400B+ space economy by 2035
Early signals from: Founders Fund, Lux Capital, Bessemer
Companies to watch: Relativity Space, Varda Space, Orbital Sidekick
Previous: Red hot during pandemic with massive valuations → Now: Significant pullback in funding and valuations
User growth plateauing, Apple privacy changes hurting ad models, shift from growth to profitability
What Changed: Realization that winner-take-all dynamics favor established platforms; new social products struggling to achieve sustainable monetization
VCs Cautious: Benchmark, Greylock, Lightspeed
Previous: Dominant investment theme for decade → Now: Facing AI disruption and multiple compression
AI tools threatening to automate away many SaaS workflows; investors worried about obsolescence
What Changed: Question whether traditional workflow software survives AI agent revolution; focus shifted to AI-native alternatives
VCs Cautious: Bessemer, Accel, General Catalyst
Previous: Massive funding rounds in 2021-2022 → Now: Selective interest in proven use cases only
Regulatory uncertainty and lack of mainstream adoption outside of financial speculation
What Changed: Focus narrowed to payments, stablecoins, and enterprise blockchain rather than speculative DeFi protocols
VCs Cautious: Sequoia, Kleiner, Index
Focus on 10x better outcomes, not 10% improvements - AI products need to fundamentally change workflows to justify switching costs
💡 Measure value delivered per task, not features shipped. Users will pay premium for agents that eliminate entire job functions.
— Sequoia Capital
Demonstrate clear path to profitability within 24 months - growth-at-all-costs era is over
💡 Show unit economics improvement quarter over quarter. VCs want to see leverage in business model, not just revenue growth.
— Benchmark Capital
Sell to business users first, IT teams second - procurement processes too slow for AI innovation cycles
💡 Build bottom-up adoption with individual productivity gains, then expand to department-wide deployments.
— Lightspeed Ventures
Model performance matters less than deployment, integration, and reliability - enterprise cares about uptime over benchmarks
💡 Invest in infrastructure and DevOps from day one. Enterprise AI failures are operational, not algorithmic.
— Greylock Partners
Deal volume down 45% YoY but quality improving. Median Series A up to $15M as VCs concentrate capital on fewer, higher-conviction bets. IPO window cracking open for profitable tech companies after 18-month freeze.
Series C • Lead: General Catalyst • Others: Google, Spark Capital, Salesforce Ventures
Largest AI round ever signals continued arms race in foundation models despite questions about monetization
AI Foundation ModelsGrowth • Lead: Sequoia Capital • Others: a16z, General Catalyst, Tiger Global
Down round from $95B to $65B valuation shows even high-quality companies facing multiple compression
Fintech InfrastructureSeries F • Lead: Founders Fund • Others: Gigafund, Sequoia, a16z
Continued mega-rounds for space companies as commercialization accelerates and government contracts expand
Space TechnologyAcquisition • Key investors: Bessemer, GGV Capital, Mayfield
Infrastructure companies with strong enterprise moats can still command premium multiples despite broader market compression
IPO • Key investors: Index Ventures, Greylock, Kleiner Perkins
Design and collaboration tools proving durable even as broader SaaS multiples compress - network effects and switching costs matter
AI infrastructure investment is overhyped - most value will accrue to application layer companies that solve real problems
Most VCs pouring money into AI infrastructure and foundational models
Reasoning: Infrastructure gets commoditized quickly; real returns come from companies that use AI to solve hard problems in specific verticals
Their Bet: Focused Series A investments in vertical AI applications rather than horizontal infrastructure plays
Physical world companies will outperform software companies over next decade as atoms become more important than bits
Software-first investment thesis dominates VC
Reasoning: Supply chain reshoring, climate transition, and geopolitical tensions create massive opportunities in manufacturing and physical goods
Their Bet: 60% of portfolio in 'atoms' companies including aerospace, energy, and manufacturing
European AI companies will outcompete Silicon Valley due to better regulation and less hype-driven development
US dominance in AI is unassailable
Reasoning: European focus on practical applications over pure research, plus GDPR compliance creates more trustworthy AI products
Their Bet: Doubled down on European AI investments including Mistral AI and DeepL
At least 3 major SaaS companies will be acquired or shut down due to AI disruption by end of 2026
HIGHSequoia Capital • Timeframe: 12 months
Implications: Traditional software categories facing existential threat; investors need to identify which workflows AI eliminates vs enhances