By the time January 2026 ended, global venture funding was surging again, nearly $55 billion invested into startups worldwide in a single month, more than double the amount from a year earlier.
But the thing is, capital wasn’t just flowing. There was a concentration, with large checks, especially for artificial intelligence companies.
About 74% of January funding went to deals of $100 million or more, and 57% went to AI-related startups alone.
However, if you stood back and looked at markets and capital flows in early 2026, you’d see something quite different, fundamental change.
Tech isn’t responding to an upswing in funding anymore. It’s adapting to new investor priorities, and market situations that are very different from the era of easy capital that impacted the late 2010s and early 2020s.
So what changed?
For most of the past decade, cheap money allowed tech growth, interest rates in certain economies were at historical lows, investors hungry for yield and growth poured capital into startups before they had profit, let alone profits.
Risk was quite blurry during that era, valuations were amplified and growth at all costs was made workable, if fragile, a strategy.
Today, it doesn’t work that way anymore.
Interest rates globally are higher than they’ve been for years. Monetary policy became tougher after pandemic stimulus faded, inflation returned in many regions, and central banks moved quickly to raise rates to rein in prices.
That made capital more expensive and investors much pickier.
Funding isn’t gone, it’s just concentrated
Despite the narrative of a “funding winter,” KPMG’s latest data shows global VC investment hit more than $138 billion in the fourth quarter of 2025, ending the year with one of the strongest totals on record.
But that masks an important trend where capital isn’t broadly distributed anymore. Investors are placing large investments on a narrow set of opportunities.
Take AI. It wasn’t just one sector among many. In 2025, AI startups drew outsized rounds, dozens of companies raised hundreds of millions, or even billion-dollar-plus investments.
The funds aren’t trickling down to every idea with a good pitch. They’re clustering around a few big names and high-conviction focus.
That shift is unignorable. It means the cost of money isn’t just higher, the bar for attracting it is, too.
A tale of two tech markets
Investors are talking about discipline, transparency, and profitability. According to a global investor survey, 61% of investors still see technology as the top sector for capital growth over the next few years, but they want transparent disclosures about strategy and returns, especially around AI.
In the first week of February 2026, global indexes experienced turbulence as software and tech stocks were sold off. Valuations slipped due to investor anxiety over whether heavy AI spending by big tech firms, think multibillion-dollar capex plans, will translate to profit.
Big names like Alphabet and Microsoft have seen their stock prices fluctuate at times because markets are questioning the returns on massive AI investments outweighing near-term costs.
At the same time, alternative corners of tech are attracting fresh interest. There’s a noticeable shift toward smaller-cap and value-oriented companies as investors rotate out of speculative growth names and into sectors they deem safer or more resilient.
Layoffs and recalibration
Again, looking at the workforce, 2025 saw a large number of layoffs in the tech industry, from startups to giants.
Thousands of jobs were cut as companies recalibrated their cost structures and refocused priorities. Those layoffs reveal the stress on growth models that relied on scale and user acquisition over cash flow and efficiency.
For founders, this has been painful and humbling. People who raised capital on promises of growth now find investors demanding sharper unit economics and quicker paths to profit.
That’s not a backlash against innovation but a higher level of financial discipline driven by macro conditions.
Where tech still finds money
Despite all of this, there are good areas.
AI commands attention. There were more than 55 U.S. AI startups raising $100 million or more in 2025 alone, showing that deep technology with good enterprise value still attracts serious capital.
These are not small checks but major commitments by major investors.
Even beyond AI, the VC world saw robust exit activity, mergers and acquisitions and IPOs contributed to healthy exit values as companies matured and found liquidity.
And while data from regional ecosystems varies, many markets are resilient. In Africa, for example, funding rebounded strongly in 2025, with total capital rising and diversified instruments, including debt, playing a bigger part.
The reality for most founders
So what does this all mean for tech founders and executives?
For one, the era of ‘raise more at any cost’ is clearly over. Investors are looking for companies that can articulate solid paths to cash flow and sustainable growth. They care about what you do with capital, not just how fast you can spend it.
Second, capital is still available, but it’s more selective. AI and related infrastructure are prime targets, but other sectors must prove strong business models to win larger commitments.
Third, the shift isn’t a simple downturn but a reset. Tech is learning to grow within macro challenges. That’s a healthier paradigm in the long term, even if it seems harsher in the short term.
Some founders feel blindsided because they raised a comfortable round only to find subsequent meetings turning into critiques of burn rates and go-to-market strategy. That is real, but it’s also a reflection of markets that now price risk differently.
Tech hasn’t lost its spark, far from it. Funding is still high, deals continue to get done, and innovation is very much alive.
What has changed is the price of patience, clarity and discipline. Cheap money didn’t just drive ideas, it impacted expectations, which should ultimately lead to tech growth.
Now those expectations are adjusting to a world where capital is not easy money. It’s selective, expensive and demanding.
And that is important, because founders today must build fast, and build wisely.
