Venture capital investments so far in 2026 are showing the same trends as 2025, with more funding going to fewer companies. According to PitchBook, quarterly U.S. VC investment totaled $267 billion, with the five largest deals raising a combined $195 billion, or over 73% of all Q1 capital. The heavy bias toward the top deals underscores the importance of narrowing the deal segments to understand what trends are faced by the majority of companies.
SSTI’s analysis focuses on deals below $100 million with identified angel and venture capital investors. Other analyses look at a broader swath of deals; however, a closer look at individual transactions reveals that deals without identified investors often fall outside the TBED activity profile and include investments in real estate, banks, or holding companies, or appear to have questionable veracity. With these issues identified, SSTI’s dataset is narrower and more conservative, but better captures activity aligned with TBED strategies and goals.
Total funding has been declining over the prior two quarters. Funding had been on an upward trend, peaking in Q3 of 2025 at $24.3 billion. Total quarterly funding has declined to just under $21.5 billion in Q1 2026, though it should be noted that investment totals remain relatively strong over the three-year period (Figure 1).
Deal activity has been on a longer-term decline since the Covid-era peak in 2021 and 2022. There were 1,486 Q1 2026 deals, down from 1,787 in Q4 2025 and 2,721 in Q1 2025. Examining longer-term trends and post-peak activity, deal count has been on a steady decline, with Q1 2026 deal count less than half that of Q1 2023. More concerning for TBED efforts is that first-quarter activity was highest in each of the past three years and a clear bump over the preceding three quarters. 2026, in contrast, breaks that trend and does not present an increase over preceding Q2-4 numbers. If the pattern holds and Q1 deal count is the highest of the year, 2026 will be a difficult fundraising year for many startups (Figure 1).
Figure 1. Deal count and total invested by quarter for U.S. angel and VC deals less than $100 million from Q1 2023 through Q1 2026.
Looking at deal type highlights which deals are driving trends. While there is an uptick in accelerator and incubator deals from Q4 2025 to Q1 2026, the increase is not as significant as in prior years (Figure 2). The driving factors behind the slowing accelerator and incubator activity are not clear, though it is possible that numbers could rebound if cohorts have delayed reporting or have shifted timing of investments to later in the year.
There is also a notable 33% decline in seed-stage deal activity from Q4 2025 to Q1 2026. Early- and late-stage VC deals have mirrored each other since Q3 2025, both dropping by 26% over the prior two quarters. Angel deals appear relatively flat, though the longer-term decline is somewhat hidden by the low numbers compared to other deal types. The small number of angel deals represented is possibly an artifact of deal categories and many angels investing in pre-seed, seed, and early VC rounds.
Figure 2. Deal count and deal type by quarter for U.S. angel and VC deals less than $100 million from Q1 2023 through Q1 2026.
The dollars invested show some notable contrasts with deal count. Total funding by deal type shows increasing interest in early-stage VC rounds at the expense of other stages (Figure 3). While there was a slight drop in early-stage VC investment totals at the end of 2025, that trend has reversed with a moderate jump from Q4 2025 to Q1 2026. More significant is the longer-term increase in early-stage VC funding beginning in Q4 2024. There is also a nearly $100 million increase in pre-seed/accelerator/incubator funding that mirrors the increase in deal count. Investment totals for all other deal segments dropped from Q4 2025 to Q1 2026, with later-stage VC on a longer-term decline.
Figure 3. Investment total and deal type by quarter for U.S. angel and VC deals less than $100 million from Q1 2023 through Q1 2026.
The trend away from later-stage investments is confounding since investors tend to reserve roughly half of a fund’s resources for follow-on investments in performing companies. A tight exit market and broader shifts in software and AI business models may be moving investors toward a select few opportunities more aligned with expectations of the exit markets. Whatever the driving factors are, TBED professionals and active investors should prepare companies for a different investment and developing new business models and pitches that better match investor interests.
While the data does not provide a clear cause for the changes in deal activity, the bigger picture is one of more money going into fewer early-stage VC deals. The well-documented investor interest in AI companies and large rounds being raised by early-stage companies appears to align with the investment data. The overall narrowing of investment activity may indicate that investors are looking beyond traditional business growth metrics and milestones, and instead looking for market share or quick-turn investments in emerging fields where well-funded startups are the acquirers. Whatever the driving forces, investors becoming more selective and placing bigger bets more cautiously could restrict more widespread economic opportunities.
Are the companies you work with facing similar funding headwinds? Have you evaluated the potential risk to your portfolio or developed a strategy for what to do if later-stage investment dries up? We would appreciate hearing from TBED professionals addressing these challenges and invite you to join our TBED Community of Practice to discuss these and other topics advancing technology and innovation-driven business growth.
This page was prepared by SSTI using Federal funds under award ED22HDQ3070129 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.