The Term Sheet: Continuous Funding Reshapes Venture Capital as AI, Deep Tech, and Mega-Funds Drive a $510 Billion First Half

The CODEW | The Term Sheet 

Q3 2026 Special Issue

The Term Sheet is The CODEW's recurring editorial series covering venture capital, startup funding, investment trends, fundraising strategies, and the business of innovation. It delivers executive analysis of where capital is flowing, why investors are making those bets, and what the developments mean for founders, operators, and technology leaders.

Welcome back to The Term Sheet, CODEW’s weekly briefing on venture capital, startup funding, and the forces shaping the innovation economy.

Venture capital is no longer operating on traditional fundraising cycles. In 2026, the industry’s defining characteristic is the continuous deployment of capital into companies building foundational technologies—from frontier AI and semiconductor infrastructure to robotics and biotechnology. Rather than waiting for startups to reach conventional milestones, investors are financing growth proactively to secure ownership in the next generation of market leaders.

Photo by Markus Winkler from Pexels

If investors expected the summer of 2026 to slow the pace of venture investing, the market has delivered the opposite. Venture capital activity continues to accelerate, fueled by unprecedented demand for artificial intelligence infrastructure, advanced hardware, biotechnology, and defense technology.

Global venture funding reached an estimated $510 billion during the first half of 2026, already surpassing the $440 billion invested throughout all of 2025. More important than the headline figure, however, is the structural shift taking place beneath the surface. Capital is becoming increasingly concentrated among a small group of companies building foundational technologies, while venture firms are raising record-breaking funds to keep pace with the escalating cost of innovation.

Here is what founders, investors, and technology leaders need to know.

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Executive Summary: Venture Capital by the Numbers

Metric	2026 Snapshot	Why It Matters
Global Venture Funding	$510B (H1 2026)	Already exceeds total funding recorded in 2025.
Capital Concentration	~40% allocated to two frontier AI labs	Investors continue to prioritize foundational AI platforms over broader market exposure.
Late-Stage Investment	77% of deployed capital	Mega-rounds remain the dominant driver of venture activity.
Exit Activity	$113B in Q2 M&A transactions	Liquidity has improved, encouraging new institutional commitments.

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Continuous Funding Is Replacing the Traditional Venture Model

For decades, startup fundraising followed a predictable rhythm. Founders raised capital, spent 12 to 18 months building product-market fit, and returned to investors after reaching key milestones.

That model is rapidly disappearing in capital-intensive sectors.

Today’s venture market increasingly resembles continuous funding, where companies raise successive rounds before exhausting previous capital, allowing investors to preserve ownership while ensuring startups can keep pace with rapidly rising infrastructure costs.

The shift is particularly evident in artificial intelligence.

Enterprise AI company Fireworks AI recently secured a $1.5 billion Series D at a reported $17.5 billion valuation, backed by Atreides Management, Index Ventures, and TCV. Rather than representing a traditional financing milestone, the round reflects investors’ willingness to provide capital well ahead of operational necessity to maintain strategic positions in high-growth companies.

A similar pattern is emerging across semiconductor startups, robotics companies, and AI infrastructure providers, where valuations are increasing rapidly as competition among top-tier venture firms intensifies.

Two structural forces are driving this transformation.

First, infrastructure costs have exploded. Training frontier AI models, designing custom silicon, and deploying hyperscale computing platforms require hundreds of millions of dollars in compute resources, specialized hardware, and engineering talent before businesses reach meaningful revenue.

Second, competition among venture firms has become increasingly aggressive. Rather than waiting for formal fundraising processes, firms such as Andreessen Horowitz, Sequoia Capital, Founders Fund, and Index Ventures are increasingly preempting future rounds by investing earlier and at higher valuations to secure long-term ownership in category leaders.

The result is a fundraising environment where access to capital is determined less by traditional milestones and more by strategic positioning within the AI ecosystem.

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The Biggest Funding Rounds This Quarter

While foundation model developers continue attracting enormous investments, significant funding is also flowing into physical AI, healthcare, and enterprise infrastructure.

Fireworks AI raised $1.5 billion to expand enterprise AI infrastructure and large-scale inference capabilities.

Wonder secured $650 million to accelerate the expansion of its technology-driven food delivery platform as competition intensifies in digital commerce.

Chai Discovery closed a $400 million Series C to advance AI-powered drug discovery, reinforcing investor confidence in the convergence of biotechnology and artificial intelligence.

Walden Robotics emerged from stealth with $300 million in funding to develop general-purpose robotics for industrial manufacturing.

Spectro Cloud raised $100 million to strengthen enterprise infrastructure management, reflecting sustained demand for cloud-native software supporting AI workloads.

Together, these transactions illustrate that investor enthusiasm extends well beyond foundation models to the infrastructure enabling the broader AI economy.

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Venture Firms Build Record War Chests

As startup financing rounds continue growing, venture firms are assembling unprecedented pools of capital to support portfolio companies over longer investment horizons.

Among the largest funds raised in 2026:

• Andreessen Horowitz (a16z): More than $15 billion across AI, infrastructure, growth, and crypto investment vehicles.
• General Catalyst: $10 billion focused on enterprise AI, healthcare transformation, and customer-first financing strategies.
• Thrive Capital: $10 billion through Thrive IX, targeting concentrated investments in frontier AI companies.
• Sequoia Capital: $7 billion AI Expansion Fund designed to maintain ownership in rapidly appreciating portfolio companies.
• Founders Fund: $6 billion Growth IV vehicle dedicated to defense technology, aerospace, robotics, and frontier AI.

These record-breaking funds reflect a simple reality: the cost of building category-defining technology companies has never been higher.

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Why It Matters

The first half of 2026 demonstrates that venture capital is undergoing a structural transformation. Rather than spreading investments across a broad range of software startups, institutional investors are concentrating capital in companies building the foundational infrastructure of the AI economy—including compute platforms, semiconductors, robotics, biotechnology, and defense technologies.

This shift is reshaping the venture ecosystem. Access to funding increasingly depends on a company’s ability to solve complex technical challenges, build defensible intellectual property, and establish a critical position within emerging technology stacks. As infrastructure costs continue to rise, investors are prioritizing businesses capable of sustaining long-term competitive advantages rather than pursuing rapid, capital-light growth.

For founders, the message is clear: raising capital has become less about hitting traditional fundraising milestones and more about demonstrating strategic relevance in markets that require significant technical expertise and long-term investment.

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Looking Ahead

The venture capital market is entering a new phase where scale has become a competitive advantage for both startups and investors.

For founders building AI infrastructure, semiconductor technologies, robotics, biotechnology, and defense systems, capital availability remains exceptionally strong. However, investor expectations have risen alongside funding levels. Technical differentiation, proprietary intellectual property, and defensible market positions are becoming increasingly important as capital concentrates around fewer, higher-conviction companies.

Meanwhile, startups operating in traditional enterprise software and consumer applications continue to face a more disciplined investment environment, where efficient growth, sustainable economics, and clear paths to profitability remain the primary determinants of fundraising success.

The first half of 2026 makes one trend unmistakable: venture capital is no longer financing startups through discrete funding rounds. Instead, investors are deploying capital continuously to secure long-term ownership in companies building the infrastructure underpinning artificial intelligence and other strategic technologies. As the cost of innovation continues to rise, access to large-scale capital is becoming a competitive advantage in itself—one that is likely to define the next decade of venture investing.

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Erwin Castro

Founder & Editor • The CODEW

Erwin Castro is the founder and editor of The CODEW, an independent technology publication covering artificial intelligence, enterprise software, SaaS, cybersecurity, startups, venture capital, technology M&A, developer tools, and IT infrastructure. With more than a decade of technology journalism experience, he has contributed to Sportskeeda, International Business Times (IBTimes), University Herald, Blasting News US, and Seeking Alpha. His work focuses on explaining the business strategy, market trends, and competitive forces shaping the global technology industry.

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