State of the Markets

H1 2026
SVB’s innovation economy outlook

SVB’s State of the Markets report is a bi-annual outlook on the innovation economy that distills venture capital fundraising, investment and exit dynamics using SVB’s proprietary data and 40+ years of insight from partnering with innovative startups. Each edition pairs our data with investor conversations and independent market analysis to deliver timely, practical insights.

This report is designed for key decision-makers within the innovation economy, including:

• Founders: To understand the current market landscape, identify opportunities and benchmark their performance.
• Investors: To gain insights into market trends, identify promising sectors and understand the exit landscape.
• Finance Leaders: To make strategic decisions based on data-driven analysis of the market.

The State of the Markets report is published every six months to provide the most current and relevant insights. This H1 2026 State of the Markets report synthesizes full-year 2025 activity with a practical outlook for the first half of 2026.

The overall AI sector is attracting a massive amount of US VC investment – $560 billion since 2022. That's equal to total deployment during the dot-com era. The top five highest valued AI companies alone have attracted a third of this funding, and their values are currently three times higher than the inflation-adjusted value of all US VC-backed internet IPOs from 1995 to 2002.

Nearly $350 billion flowed into US venture capital deals in 2025, however, US VC fundraising fell to a seven-year low. AI's continued surge and the uptick in exits in 2025 seems to have lined the coffers of growth funds, but not most VC funds. Heading into 2026, we expect fundraising to increase this year as some capital starts to cycle back to Limited Partners (LPs) and big funds that raised in 2022-2023 come back to market. Sixty-three percent of capital raised by $1 billion funds in 2022 has been deployed.

2025 was the best year for US VC-backed tech IPOs since 2021. Yet for many in the industry, it didn't feel all that positive. That's because the profile of today's IPO (and public market perception) is markedly different than before. Only half of US VC-backed tech companies in 2025 were above their last private valuation, and less than a third above their initial IPO market value. Such lukewarm reception from public markets may push some startups to wait before pulling the IPO lever for liquidity.

AI spending is driving a significant portion of US economic growth. Private investment in the Bureau of Economic Analysis (BEA) buckets that capture AI (hardware, R&D, software and data centers) is under 4% of US gross domestic product (GDP), yet these categories contributed 10% to 30% of quarterly GDP growth in 2025. In Q1, they offset what would have been a deep economic contraction, a Fed study showed.

The volume of US VC-backed M&A deals in 2025 ticked up to the highest total since 2022 – 1,050 deals – growing 11% year-over-year. Disclosed deals totaled $128 billion in 2025, the most in four years. However, signs suggest that the majority of acquisitions are not money makers for investors. Only 12% of 2025 deals have known sales prices greater than the capital these companies raised.

More VC-backed companies are buying other companies. These deals tend to be smaller – the median capital raised for companies acquired by other startups was 33% less than deals with other buyers. That’s slightly lower than the prior two years. One reason VC-backed buying is picking up may be that investors are finding value in all-stock deals.

There is no single benchmark revenue that a startup must have in order to raise a given series funding round. The middle 50% of companies will raise a Series A with between $1 million and $6.5 million in revenue. Some companies will raise Series A rounds with no revenue, and others will raise with tens of millions.

Companies will typically grow revenue between 8-12x between seed and Series A. This massive leap contributes to the lower graduation rates between seed and Series A compared to later stages.

Ultimately, defining the exact revenue a company needs to reach the next round depends on the company and sector, given there is a high degree of variance between companies and across sectors.

The report provides practical insights to help you:

• Understand where the market is concentrated.
• Benchmark your company's performance against the market.
• Identify which liquidity paths (IPOs and M&A) are opening or staying constrained. 
• Make informed, real-time decisions based on proprietary data and insights.