Executive Summary
The venture capital industry entering 2026 has undergone a structural transformation that transcends cyclical adjustment. This forecast documents eight interconnected developments that I have been tracking all year. Collectively, they chronicle a fundamentally reconfigured ecosystem characterized by altered capital sources, modified fund structures, revised return expectations, and reconstituted relationships between capital providers and deployers.
Key Findings:
- Cartel Consolidation: The top 30 venture capital firms captured 75% of 2024 fundraising capital ($57.1 billion of $76.1 billion), while emerging managers secured only 20% across 245 funds. Platform advantages in follow-on capacity, LP relationships, and multi-stage capability compound rather than dissipate.
- DPI Crisis: Distributions to paid-in capital have collapsed to generational lows, with 2018 vintage funds at approximately 0.6x DPI. The exit drought, as observed in just 66 VC-backed IPOs in 2025, and the lowest since 2016, has created structural LP capacity constraints.
- Venture Studio Migration: Studios now represent 10.3% of all VC funds launched, demonstrating an IRR of approximately 2x traditional benchmarks with 33% faster exits. The studio model represents capital flight from traditional venture dysfunction.
- AI Concentration: Five companies (OpenAI, Anthropic, xAI, Databricks, CoreWeave) captured 46% of the 2024 venture deal value. AI-native startups absorbed $131.5 billion (35.7% of global VC), creating a bifurcated market between AI-exposed and AI-excluded portfolios.
- Secondary Market Infrastructure: Secondary transaction volume reached $162 billion in 2024 (+45% YoY), with VC secondaries ($61.1 billion) exceeding IPO value ($58.8 billion) for the first time. Secondary markets have evolved from distressed liquidation to core venture infrastructure.
- LP Behavioral Revolution: McKinsey's 2025 LP survey reveals 2.5x more LPs rank DPI as "most critical" versus three years ago. Only 30% of LPs seek new manager relationships. Fund life modeling has extended well past 15 years.
- 2021 Vintage Cautionary Exhibit: The ~$220 billion deployed at record valuations in 2021 has produced only 25% of funds with any DPI after four years. Substantial secondary-market discounts for 2021-vintage companies reveal a systematic valuation disconnect.
- What is Emerging: Retail capital via evergreen vehicles, continuation vehicle normalization, alternative model proliferation, and regulatory accommodation are creating a parallel venture structure alongside contracting traditional models.
The Cartel Consolidation Reaches Terminal Concentration
The consolidation of capital among a small cohort of dominant venture capital firms has progressed from an emerging trend to a structural reality. What the 2025 forecast identified as "cartel dynamics" has hardened into a permanent feature of the venture capital landscape over the past twelve months. The data no longer suggests concentration; it confirms capture.