Venture capital’s gotten lopsided.
While you probably knew some version of this—I know I certainly talk about it enough—the data is nevertheless striking. PitchBook this week released its U.S. VC midyear outlook, and the fundraising numbers are skewed to say the least: Funds over $1 billion raked in almost 72% of all capital raised in 2026 so far. First-time managers, meanwhile, comprised under 10%. Over time, this asymmetry will stick or worsen, said Kyle Stanford, PitchBook’s director of U.S. venture capital research.
“When fundraising gets lopsided, so does pricing power,” Stanford told Fortune via email. “We can see the mega fund, multi-strategy firms are able to win deals by pricing out the rest of the market, and if they can continue to drive returns with their strategy, then they will be able to command the LP market. VC has changed a lot, and much of that change has been in favor of large funds.”
That lopsidedness follows through to exits, where the biggest are massive: This is already the year of the mega-IPO. With SpaceX’s historic debut, a stunning $1.8 trillion in IPO exit value emerged—but that doesn’t mean the IPO window is open for everyone.
“There have been a lot of discussions recently about IPOs and what can make them desirable again, and I think the market has just changed,” Stanford said via email. “Being a public company is less glamorous than being a private unicorn… I don’t see a change where IPOs again become the goal of companies.”
In terms of where VC dollars are going, the answer is (you guessed it) AI. But there’s an interesting central contradiction: The narrative in VC and startups right now is that all the venture money is going to the top AI companies, and the data bears this out—by the end of May, $274.2 billion in late-stage venture capital had been deployed, and 86.4% of that massive number links to a combined four rounds from only OpenAI, Anthropic, and xAI (since merged with SpaceX).
So, the largest checks continue being relentlessly funneled into the biggest private companies. However, early-stage deals are also proving historically active. PitchBook estimates that by the end of 2026, we’ll see more than 7,000 first financings, which would be far and away a new record.
So, VC’s looking like a tilted seesaw with a kid on one end, and a cardboard cutout on the other. But what happens next is deeply dependent on who AI’s winners (and losers) are.
“The biggest unanswered question in VC, I think, is how much return AI can drive over the long run?” said Stanford via email. “You keep hearing stories about the costs some corporations are racking up, and it starts to drive some questions about the long-term feasibility of many of the companies… 75% of tech dollars at pre-seed and seed are going to AI, and almost 90% of late-stage dollars. That’s a lot of money, and the story of AI is still new.”
Term Sheet Podcast… This week’s guest: Lux Capital’s Josh Wolfe! Over 3,000 venture capital firms are operating in the U.S. today, and Wolfe is candid: he thinks 90% of them won’t survive the decade. We sat down to talk about who survives the shakeout, where the defense tech bubble breaks, and the predictions he’s making for 2027. Watch the episode here.
See you tomorrow,
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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