Introduction: The Venture Market Looks Strong Again, but Founders Need to Read the Fine Print
At first glance, KPMG’s Q1 2026 Venture Pulse looks like the venture market has fully returned.
US$330.9 billion in global VC investment.
8,464 deals.
A quarter that surpassed the Q4 2021 record.
U.S. venture capital at US$267.2 billion.
The Americas capturing more than 80% of global VC investment.
Late-stage deal sizes and valuations rebounding.
AI funding reaching levels that would have sounded impossible only a few years ago.
This sounds like a boom.
But it is not the same kind of boom as 2021.
The 2021 market was broad.
Too broad in many places.
Capital flowed into software, fintech, crypto, consumer, marketplaces, SaaS, healthtech, edtech, climate tech, logistics, and almost every founder with a fast-growth story.
The 2026 market is different.
It is not broad exuberance.
It is concentrated conviction.
A small number of AI companies can now reshape the entire global venture dataset. One quarter can look historically strong because a handful of companies raised amounts that used to be associated with public markets, sovereign wealth funds, or infrastructure platforms.
KPMG’s report makes this clear. Five U.S.-based companies accounted for US$188.6 billion of total global VC investment in Q1 2026. OpenAI alone raised US$122 billion. Anthropic raised US$30 billion. xAI raised US$20 billion. Waymo raised US$16 billion. The numbers are enormous.
But most founders are not OpenAI.
Most founders are not Anthropic.
Most founders are not xAI.
Most founders are not building frontier model labs with multibillion-dollar compute needs and strategic investor demand.
That is why the real question is not:
Is venture capital back?
The real question is:
For whom is venture capital back?
KPMG’s Venture Pulse is useful because it shows both sides of the market.
Yes, investors are writing checks again.
Yes, AI is creating a once-in-a-generation funding cycle.
Yes, late-stage confidence has returned for perceived winners.
Yes, defense tech, spacetech, cybersecurity, robotics, and data infrastructure are gaining momentum.
But also:
Liquidity remains uncertain.
IPO windows can close quickly.
Fundraising is concentrating into large funds.
Early-stage and non-consensus founders may still struggle.
Europe remains selective.
Canada is resilient but constrained.
Asia is rebounding but heavily shaped by government and corporate capital.
Global risk is still high.
The market is not dead.
It is more divided.
That is the central lesson.
1. KPMG’s Headline Number Is Historic, but It Is Also Distorted
KPMG reported that global VC investment rose from US$128.6 billion in Q4 2025 to US$330.9 billion in Q1 2026.
That is extraordinary.
It did not merely improve.
It more than doubled.
It also surpassed the Q4 2021 record of US$210.8 billion.
But KPMG does not present this as a clean return to normal venture health. The report emphasizes that the surge was largely driven by a handful of multibillion-dollar raises by AI-focused companies.
This distinction matters.
A market can be historically strong at the top and still difficult for most companies.
When five companies account for more than half of global VC investment in a quarter, the headline number stops being a clean measure of broad funding health.
It becomes a measure of concentration.
The founder must ask:
How much of this market is relevant to my stage?
How much is relevant to my sector?
How much is relevant to my geography?
How much is relevant to my business model?
How much is being driven by companies with strategic compute needs?
How much is actually available for ordinary Seed, Series A, or Series B startups?
The answer may be very different from the headline.
2. The Market Is Not Back to 2021. It Has Entered a New AI-Capital Era.
In 2021, venture capital was inflated by low interest rates, pandemic digital acceleration, easy liquidity, public-market enthusiasm, and a willingness to fund growth far ahead of profitability.
In 2026, the energy is different.
This is not a universal growth-at-all-costs market.
It is an AI-capital market.
Investors are concentrating money into companies they believe can control or shape the next technology platform.
That includes:
Large language model companies.
AI infrastructure.
Semiconductors.
Data centers.
Autonomous vehicles.
Robotics.
Energy management.
AI platforms.
Agentic AI.
Physical AI.
Vertical AI.
AI-enabled defense and cybersecurity.
The logic is simple:
If AI becomes the operating system of the next economy, the winners could be enormous.
But the cost of competing is also enormous.
Training models, running inference, building compute capacity, hiring elite technical talent, acquiring data, securing enterprise customers, and scaling globally all require capital at a level that traditional SaaS startups never needed.
That is why the AI funding wave looks different from the software waves before it.
It is not just venture capital.
It is venture capital mixed with infrastructure finance, corporate strategy, sovereign-scale ambition, and platform competition.
3. Five Companies Changed the Entire Quarter
KPMG says five U.S.-based companies accounted for US$188.6 billion of total global VC investment in Q1 2026.
That is the most important number in the report.
It explains everything.
The record quarter was not broad-based in the ordinary sense.
It was shaped by extreme concentration.
OpenAI’s US$122 billion round alone was larger than many full-year venture totals in other regions.
Anthropic’s US$30 billion round was bigger than Europe’s entire Q1 2026 venture investment.
xAI’s US$20 billion round would be a historic number in almost any previous period.
Waymo’s US$16 billion round shows that autonomous vehicles and AI-enabled mobility are again attracting giant pools of capital.
These are not normal startup rounds.
They are platform-financing events.
Founders should not benchmark themselves against these rounds unless they are playing the same game.
A vertical AI SaaS founder, climate hardware founder, medtech founder, fintech founder, logistics software founder, or B2B marketplace founder should not say, “The market is hot, so fundraising will be easy.”
The right lesson is more nuanced:
Capital is available for companies investors believe can become category-defining platforms or strategic infrastructure.
Everyone else still needs proof.
4. The Americas Dominated Because the United States Dominated
KPMG reports that the Americas captured 82% of global VC investment in Q1 2026, driven primarily by the United States.
This is not surprising.
The U.S. has the deepest AI capital stack in the world.
It has:
Frontier AI labs.
Hyperscalers.
Cloud platforms.
Big Tech investors.
Deep venture markets.
Growth funds.
Public-market exit pathways.
Enterprise buyers.
Defense and government technology buyers.
AI talent.
Semiconductor and data center ecosystems.
The U.S. advantage is not just money.
It is the full stack.
Capital.
Customers.
Talent.
Compute.
Distribution.
Acquirers.
Public markets.
Strategic corporates.
The AI era is reinforcing this advantage.
That does not mean other markets cannot build important companies.
Europe has AI, defense tech, robotics, energy management, and deeptech.
Asia has semiconductors, data centers, robotics, industrial AI, and government-backed strategic technology.
Canada has AI research, deeptech, defense and spacetech potential, climate, and life sciences.
But the U.S. currently dominates the AI funding supercycle.
Founders outside the U.S. need to understand that reality.
They may need U.S. investors, U.S. customers, U.S. partnerships, or U.S. exit pathways to scale globally.
5. U.S. Venture Capital Is Both Extremely Strong and Extremely Uneven
KPMG reports that U.S. VC investment reached US$267.2 billion across 3,336 deals in Q1 2026.
That is a record.
But KPMG also notes that overall deal counts remained uneven and investors continued to prioritize fewer, higher-conviction investments.
This is the contradiction of the U.S. market.
The U.S. has the most money.
It also has the most concentration.
If a startup is perceived as one of the winners, the capital can be enormous.
If it is not, the market can still feel tight.
The U.S. founder must understand which market they are actually in.
Are you an AI infrastructure company?
A frontier AI company?
A vertical AI workflow company?
A defense tech company?
A robotics company?
A biotech company?
A normal SaaS company?
A fintech company?
A consumer startup?
A climate hardware company?
Each category has a different funding reality.
The U.S. market is not one market.
It is a set of parallel markets moving at very different speeds.
6. Late-Stage Confidence Is Returning, but Mostly for Category Leaders
KPMG says late-stage deal sizes and valuations rebounded sharply in Q1 2026.
That sounds positive.
But founders should read it carefully.
Late-stage confidence is not returning equally.
It is returning for companies that investors believe are:
Category leaders.
AI leaders.
Infrastructure leaders.
IPO-ready candidates.
Strategically important.
Deeply defensible.
Capable of becoming giant private or public companies.
This matters because many late-stage startups from the 2021 and 2022 boom still face valuation pressure.
Some raised too much at too high a price.
Some cut burn and survived.
Some grew into their valuations.
Many did not.
KPMG’s report suggests that capital is flowing again, but investors are still selective.
They are not rescuing every late-stage company.
They are backing companies they believe can win.
That is the difference between a rebound and a reset.
7. Valuations Are Rising at the Top, but That Can Create New Risk
KPMG’s report shows global median pre-money valuations rising strongly, especially at Series D and beyond.
The chart title says it clearly: valuations sprinted past 2021 levels for Series D-plus.
This is both opportunity and warning.
Opportunity because investors are willing to pay for perceived winners again.
Warning because high valuations create future pressure.
A startup that raises at a very high valuation must eventually justify that valuation through revenue, market control, profitability, strategic importance, IPO demand, acquisition value, or continued investor belief.
The AI market is especially exposed to this.
If AI leaders become enormous businesses, these valuations may make sense.
If some AI categories commoditize, if model costs fall, if margins disappoint, if public markets reject the price, or if customers consolidate around incumbents, some valuations may prove too aggressive.
Founders should not chase valuation ego.
The best round is not always the highest-priced round.
The best round is the one that gives the company enough capital to win without making the next round impossible.
8. The AI Market Is Broadening, but Not Every AI Startup Is Fundable
KPMG highlights that AI investment is not limited to large LLM companies.
Investors are also showing interest in:
Semiconductors.
Data centers.
AI infrastructure.
AI platforms.
Agentic AI.
Physical AI.
Industry and vertical solutions.
Autonomous vehicles.
Robotics.
Legaltech.
Energy management.
This is important.
The AI market is broadening from foundation models to infrastructure and applications.
That creates opportunities for many founders.
But the application layer will be brutally competitive.
A founder building AI applications must prove:
Workflow ownership.
Customer ROI.
Data advantage.
Distribution.
Defensibility.
Security.
Integration.
Retention.
Gross margin after AI costs.
Ability to survive model improvement.
Ability to survive incumbent platform competition.
Many AI startups are features.
Some are products.
A few will become companies.
Investors are trying to identify the few.
9. Agentic AI Will Create a New Fundraising Wave, but Also a New Failure Wave
KPMG mentions agentic AI as part of the investor interest landscape.
Agentic AI is one of the most important themes in the next venture cycle.
The promise is powerful:
AI agents that execute workflows.
AI agents that complete tasks.
AI agents that coordinate systems.
AI agents that handle customer support, research, sales operations, compliance, coding, finance, procurement, or legal work.
But agentic AI also raises hard questions:
Can the agent act reliably?
Can it be trusted?
Can it handle exceptions?
Can it integrate with enterprise systems?
Can it maintain audit trails?
Can it avoid hallucinations?
Can it operate securely?
Can it comply with regulation?
Can it show economic value?
Can it replace labor or only assist labor?
Can it be priced based on outcomes?
Agentic AI will attract funding.
It will also produce many failures.
The winners will not be the ones with the best demo.
They will be the ones that can own real workflows safely and economically.
10. Physical AI and Robotics Are Returning Because AI Is Moving Into the Real World
KPMG highlights physical AI and robotics as areas of investor interest.
This matters because AI is no longer only software on screens.
It is moving into:
Factories.
Warehouses.
Hospitals.
Vehicles.
Construction sites.
Farms.
Mining operations.
Retail stores.
Homes.
Defense systems.
Logistics networks.
Robotics and physical AI can create enormous value, but they are harder than software.
Founders must prove:
Real-world reliability.
Safety.
Hardware economics.
Deployment speed.
Service and maintenance.
Customer ROI.
Manufacturing path.
Regulatory compliance if relevant.
Integration with existing workflows.
A robot that works in a demo is not enough.
A physical AI system must work in messy environments.
Investors are interested again because AI has improved capability.
But the best founders will remember:
The physical world is unforgiving.
11. Autonomous Vehicles Are Back in the Venture Conversation
KPMG highlights major autonomous vehicle financing rounds, including Waymo in the U.S., Wayve in the UK, and Anhui Shenji Technology in China.
This shows that autonomous vehicles are not dead.
They moved from hype to proof.
The category is now about real deployments, regulatory permission, safety, unit economics, and market rollout.
Autonomous vehicle startups need:
Capital.
Technical talent.
Safety validation.
Regulatory approval.
Fleet operations.
Insurance.
City partnerships.
Customer trust.
Mapping and sensor strategy.
Unit economics.
This is why only a few companies can seriously compete.
The category remains enormous, but it is not an ordinary startup category.
It is infrastructure, software, hardware, mobility, regulation, insurance, and public trust all in one.
12. Defense Tech and Spacetech Are Becoming Mainstream Venture Categories
KPMG says defense tech and spacetech continued gaining traction in Q1 2026, supported by geopolitical tensions and government engagement.
This is one of the biggest structural shifts in venture capital.
Defense tech used to be uncomfortable for many traditional VCs.
Now it is becoming mainstream.
Why?
Wars and geopolitical tensions have changed the conversation.
Drones.
Autonomous systems.
Cybersecurity.
Space infrastructure.
Secure communications.
AI intelligence.
Border security.
Resilience.
Supply-chain security.
Dual-use technologies.
Governments need faster innovation.
Startups can move faster than traditional defense procurement systems.
But defense tech is not normal SaaS.
Founders must understand:
Government procurement.
Security requirements.
Export controls.
Field reliability.
Dual-use markets.
Defense budgets.
Prime contractors.
Ethics.
Compliance.
Long sales cycles.
The opportunity is real.
The complexity is real too.
13. Spacetech Is Strategic Because Space Is Infrastructure
KPMG mentions iSpace, Interstellar Technologies, York Space Systems, and rising government interest in space ecosystems.
Spacetech is no longer only about rockets.
It includes:
Satellites.
Earth observation.
Communications.
Defense.
Navigation.
Climate monitoring.
Supply-chain intelligence.
Agriculture monitoring.
Space infrastructure.
Launch services.
Data platforms.
In-orbit services.
Space is becoming part of critical infrastructure.
That makes it attractive to governments, defense buyers, telecoms, climate companies, logistics companies, insurers, and data customers.
But spacetech is capital-intensive.
It requires engineering depth, regulatory knowledge, launch access, customer contracts, and patient capital.
Investors will fund it selectively.
Founders must raise around technical and commercial milestones.
14. IPO Optimism Returned, Then Geopolitics Interrupted It
KPMG says the U.S. IPO market had a steady start to 2026, with several successful IPOs early in the quarter.
Then the Middle East conflict brought the U.S. IPO market to a halt.
This is a reminder that venture exits depend on macro conditions.
A startup can be ready to go public and still be delayed by:
War.
Oil prices.
Inflation concerns.
Rate expectations.
Public equity volatility.
Policy uncertainty.
Tariffs.
Geopolitical shocks.
Sector-specific sentiment.
Founders cannot control the IPO window.
They can control readiness.
That means:
Clean financials.
Internal controls.
Governance.
Predictable revenue.
Cybersecurity.
Legal structure.
Investor relations narrative.
Customer concentration management.
Board quality.
A company that is ready can move when the window opens.
A company that is not ready must watch from the sidelines.
15. M&A May Become More Important Than IPOs for Many Startups
KPMG expects M&A to play an increasingly important role as a path to exit amid ongoing market uncertainty.
That is practical.
If IPO markets remain uneven, many startups will need alternative liquidity paths.
Strategic acquisitions.
Talent acquisitions.
Private equity rollups.
Corporate acquisitions.
Secondaries.
Mergers.
M&A is especially important in AI because many companies will want to acquire capabilities, teams, data, or infrastructure instead of building everything internally.
But founders should not treat M&A as a last-minute rescue.
A strong M&A path requires:
Strategic buyer map.
Clear differentiation.
Clean data room.
Strong customer metrics.
IP clarity.
Security and compliance readiness.
Integration logic.
Realistic valuation expectations.
Founders should build companies that can be acquired from strength, not desperation.
16. Large Funds Are Winning the Fundraising Market
KPMG says global fundraising activity picked up in Q1 2026, but primarily for the largest funds.
The report notes that total fundraising for US$1 billion-plus funds was already ahead of the US$30.8 billion seen during all of 2025.
This is a huge signal.
LPs are concentrating capital into large, established firms.
That has consequences.
Large funds have more reserves.
They can chase mega-rounds.
They can support late-stage category leaders.
They can invest in AI infrastructure.
They can compete for consensus deals.
But emerging managers may struggle.
This matters because emerging managers often back:
Unusual founders.
Underestimated founders.
Regional founders.
Pre-seed technical teams.
Niche sectors.
Women founders.
Immigrant founders.
Early deeptech.
Climate and health opportunities before they become obvious.
If LP capital concentrates too much, the founder market narrows.
The venture ecosystem needs large funds and emerging specialists.
The current market favors the large funds.
17. Venture Capital Has Entered the Era of Consensus Deals
The broader 2026 data from PitchBook-NVCA describes the market as an era of consensus deals.
KPMG’s report shows the same pattern.
Capital flows aggressively into companies everyone agrees are likely winners.
That creates a self-reinforcing loop.
Top companies raise large rounds.
Large funds invest.
Valuations rise.
Talent joins.
Media attention increases.
Customers pay attention.
Strategic investors want exposure.
The company becomes even more likely to raise again.
This can produce massive winners.
It can also starve non-consensus innovation.
The best startups are not always obvious early.
The venture industry needs some investors willing to fund what does not yet look obvious.
Founders outside consensus categories must build stronger proof.
Investors outside consensus categories must have stronger conviction.
18. Europe Is Stronger Than the Headline Suggests, but Still Selective
KPMG reports that European VC-backed companies raised US$25.7 billion across 1,939 deals in Q1 2026.
Europe recorded a record number of US$1 billion-plus VC deals.
The strongest areas were AI and defense tech.
But KPMG also says activity remained highly selective and concentrated among large, established companies.
This is Europe’s venture reality.
Europe has talent.
Universities.
Deeptech.
AI.
Defense tech.
Climate tech.
Robotics.
Industrial software.
Fintech.
Public policy support.
But it still struggles with scale, fragmentation, late-stage capital, procurement, and exit depth compared with the U.S.
Founders in Europe can raise, but the bar is high.
Investors want:
Scale.
Defensibility.
Profitability path.
Strategic relevance.
Strong governance.
Evidence.
Europe is not weak.
It is selective.
19. Europe’s Defense Tech Moment Is Real
KPMG says defense tech gained acceptance as an investable asset class in Europe, supported by rising geopolitical tensions and government engagement.
This is one of Europe’s most important startup shifts.
Europe has a major need for defense modernization.
Drones.
Cybersecurity.
Autonomous systems.
Secure communications.
Space infrastructure.
Supply-chain resilience.
Dual-use technologies.
AI-enabled intelligence.
Founders building in this area may benefit from policy support, procurement changes, and investor attention.
But they must understand that defense is not normal enterprise software.
Selling to government requires patience, credibility, certifications, field testing, partnerships, and trust.
The upside is real.
The sales path is hard.
20. Asia Is Rebounding Around Strategic Technologies
KPMG reports that VC investment in Asia rebounded in Q1 2026, driven by AI, semiconductors, infrastructure, and large financings in China, Japan, and Singapore.
This is not surprising.
Asia’s technology strength is often tied to hardware, manufacturing, semiconductors, industrial systems, data centers, robotics, and government-backed strategic sectors.
KPMG highlights AI, semiconductors, data centers, and energy-related infrastructure as major investment areas.
This makes sense.
AI cannot scale without compute.
Compute cannot scale without chips.
Chips cannot scale without manufacturing, power, supply chains, and infrastructure.
Asia’s venture market is therefore shaped by the physical layer of the AI economy.
Founders building in Asia should understand the role of government and corporate capital.
In many Asian markets, strategic technology sectors are supported by public policy, corporate balance sheets, and national competitiveness agendas.
That can help founders.
It can also shape the market more heavily than in the U.S.
21. China Is Stabilizing, but Selectively
KPMG says VC activity in China showed signs of stabilization in Q1 2026 as investors cautiously returned.
Interest clustered around:
AI.
Robotics.
Semiconductors.
Biotech.
Spacetech.
Corporate and state-supported strategic investments.
China’s venture market is no longer the free-flowing global capital magnet it once was.
But it remains strategically important.
China has:
Manufacturing scale.
Engineering depth.
Robotics capability.
EV and battery ecosystems.
AI talent.
Consumer digital markets.
Semiconductor ambitions.
Government industrial policy.
Founders and investors should not ignore China.
But they should recognize that China’s market is now more selective, strategic, and policy-shaped.
22. Canada Is Resilient, but Still Faces Scale and Ownership Questions
KPMG’s Americas section says Canada saw selective but resilient VC activity in Q1 2026, supported by AI, deeptech, and defense-related innovation.
That aligns with broader Canadian data.
Canada has real strengths:
AI research.
Deeptech.
Climate technology.
Life sciences.
Defense and spacetech potential.
Quantum.
Cybersecurity.
Mining technology.
Fintech.
SaaS.
But Canada still faces structural challenges.
BDC says Canada is generating innovation but not consistently capturing its value.
Investment held near US or CAD-equivalent high levels in 2025, but activity concentrated into fewer deals.
Late-stage growth remains heavily exposed to foreign decision-making.
AI accounted for nearly half of Canadian VC investment in 2025.
Canadian VC fundraising is under pressure, and emerging managers are struggling.
This creates a clear founder lesson:
Canadian startups need to build globally, but must plan capital strategy early.
They may need U.S. investors.
They may need U.S. customers.
They may need domestic corporate customers.
They may need government procurement.
They may need strategic capital.
They may need to protect Canadian value while accessing global scale.
Canada’s innovation problem is not creation.
It is scale and value capture.
23. Canada’s Defense and Spacetech Opportunity Could Become More Important
KPMG notes that Canada launched its Defence Industrial Strategy and increased emphasis on spacetech and defense innovation.
This matters.
Canada has underused potential in:
Arctic security.
Space systems.
Satellites.
Quantum sensing.
Cybersecurity.
AI defense applications.
Drones.
Autonomous systems.
Critical minerals.
Dual-use technologies.
Secure communications.
Defense supply chains.
For Canadian founders, defense and spacetech may become more investable if government procurement, industrial policy, and strategic capital align.
But the same rule applies:
Interest is not enough.
Founders need procurement pathways, technical proof, customer validation, and capital that understands long timelines.
24. Latin America Remains Uneven, but Fintech Still Matters
KPMG says Latin America remained uneven in Q1 2026, with fintech still core in Mexico and Brazil, while AI, logistics, and infrastructure-related solutions attracted interest.
This fits the broader Latin America pattern.
The region has major startup opportunities:
Fintech.
Payments.
Credit.
SME finance.
Logistics.
E-commerce.
Infrastructure software.
AI for business operations.
Climate and energy.
But macro and political uncertainty can affect funding.
Founders in Latin America must show discipline.
Investors want models that can survive currency volatility, regulatory complexity, and market fragmentation.
The opportunity is real.
The market is selective.
25. Cybersecurity Is Moving Back Up the Priority List
KPMG says cybersecurity is expected to see growing investment given current conflicts and the challenging geopolitical environment.
This is logical.
AI increases cyber risk.
Geopolitical conflict increases cyber risk.
Enterprises are more digital.
Governments need resilience.
Critical infrastructure is vulnerable.
Startups are building in:
Identity.
Threat detection.
AI security.
Cloud security.
Data protection.
Secure communications.
Operational technology security.
Defense cyber.
Cyber insurance tooling.
Compliance automation.
The cybersecurity founder must still prove differentiation.
The market is crowded.
But the demand is real and durable.
26. Energy, Data Centers, and AI Infrastructure Are Now Connected
KPMG highlights data centers and AI infrastructure as key investment areas.
This is one of the defining facts of the AI era.
AI is not only code.
It requires physical infrastructure.
Power.
Cooling.
Land.
Chips.
Servers.
Networking.
Data centers.
Grid connections.
This creates new venture opportunities in:
Data center development.
Energy management.
Grid optimization.
Cooling technology.
Power electronics.
Battery storage.
Load balancing.
Renewable procurement.
Semiconductor infrastructure.
Compute orchestration.
AI cost optimization.
The AI economy will be constrained by energy and infrastructure.
Founders solving those bottlenecks may find strong investor interest.
27. What Founders Should Learn From KPMG’s Venture Pulse
Founders should take six big lessons from KPMG’s report.
1. Do not confuse record VC totals with easy fundraising
The market is strong at the top, not uniformly strong.
2. AI is the center of gravity
But only real AI advantage matters.
3. Late-stage money is back for winners
But not for weak companies still carrying old valuations.
4. IPO windows are fragile
Prepare early and do not assume public markets will be ready when you are.
5. M&A matters
Strategic exits may be the practical path for many companies.
6. Capital is concentrating
Large funds, category leaders, and consensus deals are winning more of the market.
The founder who understands this will make better decisions.
28. What AI Founders Should Do Now
AI founders should be ambitious, but disciplined.
They should know:
Compute cost.
Inference cost.
Gross margin.
Model dependency.
Data advantage.
Workflow ownership.
Security requirements.
Customer ROI.
Regulatory risk.
Distribution strategy.
Incumbent threat.
A founder building AI cannot only say, “AI is hot.”
The market already knows that.
The founder must prove why this AI company can become durable.
29. What Non-AI Founders Should Do Now
Non-AI founders should not panic.
Great companies will still be built outside AI.
But every founder must be AI-aware.
A non-AI startup should explain:
How AI affects the category.
How the company uses AI internally.
How AI changes customer expectations.
How AI affects margins.
How AI could threaten or strengthen the product.
Why the company remains valuable in an AI-first market.
The worst position is not being non-AI.
The worst position is ignoring AI.
30. What Investors Should Learn
Investors should avoid two mistakes.
First, do not ignore AI. It is a real platform shift.
Second, do not fund every AI company as if it is a platform.
Investors should ask:
Is this a foundation model company?
Infrastructure company?
Workflow company?
Feature?
Services company?
Data company?
Robotics company?
Defense company?
Each requires different underwriting.
Investors should also continue backing non-AI companies with strong fundamentals.
The next great company may not look like the current consensus deal.
31. What LPs Should Learn
LPs should pay attention to concentration.
They should ask fund managers:
How much portfolio value depends on AI?
How much DPI has been realized?
How many companies still need liquidity?
How much exposure is in consensus deals?
How much capital is reserved for follow-on?
Can the fund access top AI deals?
Can the fund find non-consensus opportunities?
What is the emerging manager strategy?
How much value is paper versus cash?
The venture market’s headline strength does not automatically solve LP liquidity problems.
32. What Corporate Investors Should Learn
Corporate investors should use this market strategically.
AI, defense tech, spacetech, cybersecurity, energy management, robotics, and data infrastructure are not only financial categories.
They are business transformation categories.
Corporates should ask:
Which startups can improve our core operations?
Which technologies threaten our business?
Which companies should we partner with?
Which companies should we invest in?
Which companies should we buy?
Which AI tools can create real productivity?
Which defense, cyber, or resilience technologies matter?
Corporate venture capital should not chase headlines.
It should create strategic advantage.
33. What Canada Should Learn
Canada should treat KPMG’s report as both opportunity and warning.
Opportunity because AI, deeptech, defense, spacetech, and cybersecurity are becoming more investable globally.
Warning because capital is concentrating in the U.S., in large funds, and in mega-round AI companies.
Canada must strengthen:
Domestic growth capital.
Corporate procurement.
Government procurement.
Defense innovation pathways.
AI infrastructure.
Spacetech support.
University commercialization.
Emerging managers.
Exit pathways.
Canadian founders can build world-class companies.
But the country must help them scale and retain value.
34. The Founder’s Practical Fundraising Checklist
Before fundraising in this market, founders should answer:
Which market am I actually raising in?
Is my category hot, selective, or out of favor?
What stage-specific metrics do investors expect?
What makes my company defensible?
How does AI affect my company?
What milestone does this round fund?
What valuation is realistic?
Who are the right investors?
Do they have dry powder?
Can they follow on?
What is my backup plan?
Is M&A relevant?
Can I reach profitability if capital tightens?
This is not a market for vague fundraising.
It is a market for disciplined fundraising.
Conclusion: The Venture Market Is Open, but It Is Not Open Equally
KPMG’s Venture Pulse Q1 2026 is one of the clearest pictures of the current venture market.
It shows strength.
US$330.9 billion globally.
8,464 deals.
A record U.S. quarter.
Strong AI funding.
Rising late-stage confidence.
Large European and Asian rounds.
Momentum in defense tech, spacetech, cybersecurity, autonomous vehicles, and infrastructure.
But it also shows fragility and concentration.
Five U.S.-based companies accounted for US$188.6 billion of global VC investment.
The Americas dominated because the U.S. dominated.
Large funds captured the strongest fundraising momentum.
IPO optimism was interrupted by geopolitical uncertainty.
Europe remained selective.
Asia rebounded, but through strategic sectors and large deals.
Canada remained resilient, but still faces scale and ownership questions.
This is not the return of the 2021 market.
It is a new market.
A market where AI can make the global numbers look historic.
A market where the best companies can raise enormous sums.
A market where late-stage category leaders can command valuations that exceed 2021 levels.
But also a market where many founders still face tough diligence, slow rounds, valuation pressure, uncertain exits, and investor selectivity.
The venture market is open.
But it is not open equally.
The best founders will not mistake someone else’s megadeal for their own fundraising environment.
They will build for the market they are actually in.
They will understand AI’s role.
They will prove customer value.
They will watch burn.
They will prepare for M&A and IPO uncertainty.
They will build investor relationships early.
They will treat capital as a tool, not a rescue.
The venture market is no longer asking only, “Can this company grow?”
It is asking:
Can this company become one of the few that deserves capital in a world where capital is concentrating?
That is the new test.