Part 2: What’s Getting Funded in 2026 and What it Means for Your Next Round.
If you missed Part 1, we explained why funding feels harder even in a record-setting quarter.
Find it here: [LINK]
In Part 2 we explore what these changes looked like in the first quarter: which companies got funded and what their funding rounds suggest moving forward into the second quarter.
What’s getting funded right now
The fastest way to understand this market is to look at where capital actually went.
1. Capital is concentrating into a small number of category leaders
In Q1 2026, a handful of companies absorbed a majority of venture capital.
- OpenAI raised approximately $122 billion
- Anthropic raised approximately $30 billion
- xAI raised approximately $20 billion
- Waymo raised approximately $16 billion
Together, these four companies raised about $188 billion—roughly 65% of all global venture funding in the quarter.
This level of concentration is historically unusual.
It reflects a market where investors are making fewer, larger bets on companies expected to define entire industries.
2. AI is not just dominant, it is reshaping allocation
AI companies captured the majority of capital in Q1.
- Approximately 80%+ of all venture funding flowed into AI-related companies
This has a direct consequence:
Most startups are competing for a much smaller portion of available capital.
That is why the market feels tight, even though total funding is high.
3. Infrastructure and ecosystem companies remain highly fundable
Beyond the largest AI labs, investors are consistently backing companies that support the broader ecosystem.
This includes businesses focused on:
- Data infrastructure
- Compute and energy systems
- Security and compliance
These companies share a key characteristic: they are not optional.
They are foundational to how modern systems operate, particularly as AI adoption increases.
4. Early-stage funding still exists but is far more selective
Early-stage funding has not disappeared, but it has changed in structure.
- Fewer companies are funded
- Check sizes are larger
- Investors require stronger conviction earlier
This means founders need to present a clearer case for:
- Market relevance
- Technical strength
- Long-term scalability
The threshold for early-stage funding is meaningfully higher than in prior years.
What these examples reveal
Across all these cases, a consistent pattern emerges.
Companies that are getting funded tend to:
- Align with where capital is flowing
- Solve high-priority, non-discretionary problems
- Demonstrate credible traction or clear potential
- Operate with discipline and efficiency
This is not a broad-based funding market.
It is a high-conviction environment.
What to expect in Q2 2026
The dynamics from Q1 are likely to continue into Q2.
Founders should expect:
- Continued concentration of capital in AI and infrastructure
- Ongoing selectivity across all funding stages
- Gradual return of capital to strong non-AI companies
- Persistent pressure on valuation and deal terms
This is not a closed market.
It is a more deliberate one.
The legal layer founders should not ignore
As markets become more selective, investor leverage increases.
We are seeing more deals include:
- Stronger liquidation preferences
- More aggressive anti-dilution protections
- Increased control provisions
These terms are often accepted under pressure.
But they shape long-term outcomes, including:
- Ownership dilution
- Governance rights
- Future fundraising flexibility
Bottom line
The funding environment in 2026 is not defined by scarcity.
It is defined by selectivity.
The founders who succeed in this market are those who:
- Understand where capital is flowing
- Position accordingly
- Approach financing strategically
Need help structuring your next round?
At Primum Law Group, we help founders:
- Evaluate financing structures
- Negotiate investor terms
- Protect long-term ownership and control
If you’re approaching fundraising for the first time or still have questions about negotiating a term sheet, join us for our upcoming masterclass, How to Raise Venture Capital for Your Startup without Giving Up Control.
Reserve your Spot: https://howtoraisevcround.com/how-to-raise-priced-round-2