Module 1 — Foundations · Lesson 1.3
The Market You Are Raising Into: 2026
Record dollars, extreme concentration, and what that means outside the AI megadeals
What you'll learn
- Describe the scale and concentration of US venture investment in 2026
- Read median round sizes and pre-money valuations by series, and how AI companies differ
- Explain the squeeze on first-time and mid-sized funds and why it matters to founders
- Place a venture round within the wider private market, where most exempt capital is raised
Fundraising advice ages quickly because the market it describes does. A plan built on the norms of 2021, or even 2024, can misjudge what a seed round costs, how long it takes, and which investors are writing cheques at all. This lesson is a snapshot of the market as reported through September 30, 2026. Every figure carries its date; treat them as the conditions you are raising into, and check the next quarter's numbers before you rely on any of them.
A record year, made by a few rounds
According to the PitchBook-NVCA Venture Monitor for the third quarter of 2026, US venture deal value reached 515.8 billion dollars across an estimated 14,199 deals in the first three quarters of the year — already the highest total in the dataset and roughly 44 percent above the previous full-year record, 2021's 357.9 billion. The first and second quarters of 2026 were the two largest quarters ever recorded.
The headline hides the shape. The third quarter fell to 98.4 billion dollars, down roughly 40 percent from the second, even though an estimated 5,012 deals closed — the second-highest quarterly count in the dataset. Fewer dollars, near-record deal count: most of the first half's money had gone into a handful of outsized rounds, many of them for frontier AI labs. Even without those, concentration remained structural. In the third quarter, deals of 100 million dollars or more were about 5 percent of deal count and about 75 percent of deal value.
AI companies accounted for 82.7 percent of total deal value for the year to date, the highest annual share in the report's history. The report also notes that some investors are now actively looking for sectors insulated from AI disruption — so 'not an AI company' is a narrower field, not a closed one.
What rounds cost: sizes and valuations by series
The same report gives medians for 2026 to date, which are the most useful planning numbers for a founder. Median pre-money valuations rose at every series: seed to about 18.3 million dollars (from 16.0 million in 2025), Series A to about 60.3 million (from 48.1 million), Series B to 187 million, Series C to 500 million, and Series D and later to about 1.72 billion — more than double 2025's level.
Median deal sizes rose at every series except seed. The median seed round was about 3.0 million dollars, slightly down from 3.4 million in 2025, while the median Series A rose to about 17.4 million from 13.7 million. Read together, those two lines describe a seed market where valuations held up but rounds got a little smaller, and an A market where the companies that get there raise more.
AI companies sit well above these medians — the report shows a large AI valuation premium at every series and AI step-ups between rounds back near their 2021 highs. A non-AI founder benchmarking against headlines is benchmarking against a different market.
First-time financings — a company's first institutional venture round — were strong: 34.3 billion dollars across an estimated 8,625 deals through the third quarter, already more deals than 2021's full-year record of 8,507. Lower costs of building, the report argues, have increased company formation; the consequence is more competition for each early-stage cheque.
The squeeze on new and mid-sized funds
Founders tend to ignore fundraising by funds. They should not, because it decides who will be writing cheques in two years.
US venture funds raised 108.5 billion dollars through the third quarter of 2026, but the money is concentrated in large, established managers. Just 4.9 billion dollars was raised across 81 first-time funds, on pace for the fewest in a decade, and the number of distinct emerging firms closing at least one fund fell from 927 in 2022 to 440 in 2025 to 211 through September 2026. The average fund size rose to 165.4 million dollars while the median fell to 10 million — the middle of the market is disappearing. Funds between 100 and 500 million dollars, which made up roughly 17 percent of funds closed in the years before 2021, were about 10 percent in 2026.
The report attributes this to limited partners waiting for distributions: money comes back slowly, and what does come back is recommitted to managers with records. For a founder this means two populations of investor — very large multistage funds with enormous cheques for the companies they favour, and small, specialised seed funds — and fewer in between. For an emerging manager, it is the market Lesson 5.2 is written for.
Venture is a slice of the private market, not all of it
The venture headlines are a fraction of the capital raised privately in the United States. The SEC's Office of the Advocate for Small Business Capital Formation reported, in its fiscal 2025 staff report published in January 2026, that companies other than pooled funds raised about 378 billion dollars in Rule 506(b) private placements in the twelve months to June 2025, about 24 billion under Rule 506(c), about 1.2 billion through Regulation A and about 235 million through Regulation Crowdfunding. Initial public offerings raised about 47 billion. The same report counts 17.9 billion dollars of angel investment in 2024, with 78 percent of angel deals going to first-time CEOs.
Two practical points follow. Most private capital is raised without general solicitation, through Rule 506(b) — the framework Lesson 1.4 explains. And for most companies, and for most placement agents' issuers, the relevant market is not the AI megadeal; it is the much larger, quieter market of exempt offerings to accredited investors, where the discipline of a ranked list and a tracked pipeline matters more, not less.
Benchmark your round against the market, then forecast it honestly
- 1
Record the facts the comparison needs
On the round's deal in /deals, fill in the amount, sector and stage. The investor matching in Module 3 reads the same fields, so this is not busywork.
- 2
Write your assumptions next to the market's
In /knowledge, add a short note: your target raise and pre-money, the 2026 medians for your series, and why you are above or below them. A number you can defend in a meeting is worth more than a number that matches a headline.
- 3
The Forecast view in /deals projects expected value from each stage's default probability and the counterparty engagement on record. It reports what it knows and says when deals have no engagement recorded — it does not invent momentum.
Market fit of the round
- Ask versus series median
- Your target raise and pre-money divided by the current median for your series.
- Healthy signal: A Kavanah suggestion: far above the median needs a reason you can state in one sentence; far below it may be leaving value on the table or signalling a smaller ambition than the round implies.
- Investor mix by fund size
- Share of target investors that are small seed funds, mid-sized funds and large multistage funds.
- Healthy signal: Check it against the 2026 data: if your list leans on mid-sized funds, it leans on the part of the market that is shrinking.
- Data freshness
- Age of the market figures your plan relies on.
- Healthy signal: Re-check each quarter. A benchmark more than two quarters old is history, not a plan.
Key takeaways
- ·US venture deal value set a record by Q3 2026, but a few very large AI rounds account for most of it.
- ·2026 medians: seed pre-money about $18.3M on a ~$3.0M round; Series A about $60.3M on ~$17.4M — AI companies sit well above.
- ·First-time and mid-sized funds are being squeezed; capital is concentrating in large established managers.
- ·Most private capital is raised in Rule 506(b) offerings, not in venture headlines.
Whatever the market pays, it pays under rules. The next lesson covers the exemptions that make a private raise legal, who counts as an accredited investor in 2026, and what you may and may not say while you raise.
Sources
- 1.Q3 2026 PitchBook-NVCA Venture Monitor
PitchBook and the National Venture Capital Association · PitchBook-NVCA Venture Monitor, data as of September 30, 2026 · 2026
Deal value of $515.8B YTD vs 2021's $357.9B; Q3 $98.4B and ~5,012 deals; AI 82.7% of deal value; median pre-money and deal sizes by series; first-time financings; first-time fund count, emerging-firm count, median and average fund size.
- 2.PitchBook-NVCA Venture Monitor (research page)
National Venture Capital Association · NVCA · 2026
Summary of the Q3 2026 edition, including the $108.5B raised by US venture funds through Q3 2026.
- 3.Office of the Advocate for Small Business Capital Formation — Fiscal Year 2025 Staff Report
U.S. Securities and Exchange Commission · SEC staff report (January 8, 2026) · 2026
Capital raised by non-fund issuers by pathway (506(b) $378B, 506(c) $24B, Reg A $1.2B, Reg CF $235M, IPOs $47B); angel investment of $17.9B in 2024 and the share of angel deals to first-time CEOs.