‍‍

‍

Key Takeaways:

‍

• Healthy market and good time to fundraise
  

• Deal volume sets post-pandemic highs
  

• AI companies continue to raise at faster velocity and level
  

• IPO pipeline includes many household names
  

• Investor demand remains for strong core business models

‍

Download the summary report here.

‍

Venture capital deals in the valuation range of $1 Billion to $10 Billion in Q1 2026 had a median markup of 2.8x. This means that if a company’s prior round was raised at a $1 Billion valuation, then a subsequent equity financing in Q1 would have been raised at a $2.8 Billion valuation. Deal volume and markups are reaching highs not seen since the ZIRP era. Much of this activity is being driven by AI companies, as evidenced by the 4.2x median markup within that subset. This is a healthy market and a good time for founders to contemplate their next raise.

‍

‍

Founders often target a new round every 12 to 24 months as their business grows, giving them time to build their product and customer base and hit milestones before their next fundraise. We are currently in a healthy market with a median of 12 months between rounds. It is worth nothing that AI companies had a median of 9 months between rounds, meaning a full year has yet to transpire before the median 4.2x markup.

‍

‍

AI companies are currently seeing almost twice the markup as compared to non-AI companies and in roughly half the time between rounds. As a founder of an AI company, this is a great time to fundraise. As an investor, it is important to understand both the growth trajectory and the moat of a company as you put capital to work.

‍

‍

Starting with the launch of ChatGPT in late 2022, AI companies have represented a growing share of venture-backed deals, reaching 49% of all deals in Q1 2026. Non-AI deals still represent over half of deal volume with 44 unique deals in the $1 Billion to $10 Billion valuation range this past quarter.

‍

‍

Who has been driving the recent uptick in deal activity? Not ZIRP-era companies, but rather a new crop of founders and companies that first crossed $1 Billion in valuation in 2023 or later.

‍

‍

The IPO pipeline continues to build with recent announcements in Q2 and more expected over the summer.

‍

‍

In addition to the IPO market, there is a thawing in the M&A space, with activity increasing over the past several quarters.

‍

‍

‍

The market conditions in Q1 offer a number of considerations for Founders:

• This is a healthy venture capital market and good time to fundraise
  
  
• The market for AI deals remains particularly elevated
  
  
• Investors focus on the potential impact of AI disruption, both how your company may drive the disruptions and how it could also be disrupted by them
  
  
• Investors are also weary of the "Nth" company in the same space. Certain themes are overcrowded and potentially overfunded
  
  
• A small number of household names are raising quickly, often at healthy markups
  
  
• Articulate your strong core business model (with data)

‍

About The Market Conditions Update

‍The Friends & Family Capital Market Conditions Update features metrics that we track internally on companies raising capital at valuations ranging from $1 Billion to $10 Billion.

This is one of the assets we review with founders, CEOs, and CFOs in our network as they prepare for their growth rounds.

‍