AI companies dominate venture capital funding with skyrocketing valuations

In the United States, PitchBook released its Q2 2026 U.S. VC Valuations data, revealing a stark divide in the venture capital market. The report indicates that a significant majority of venture dollars, approximately 87.5%, are being funneled into artificial intelligence (AI) companies, while non-AI companies are left to compete for the remaining funds. This trend highlights a growing preference among investors for AI startups, which are experiencing substantial valuation increases compared to their non-AI counterparts. For instance, non-AI companies at the median saw valuation step-ups of 1.6 times, while AI companies enjoyed a much higher step-up of 2.2 times. The disparity becomes even more pronounced in later funding rounds, particularly Series D and beyond, where AI companies have achieved a staggering 6.6 times valuation increase.

The report also emphasizes the remarkable growth in the median velocity of value creation for AI companies, which surged from $108.9 million in 2025 to over $1 billion in 2026, marking nearly a tenfold increase. This dramatic rise underscores the significant impact that AI is having on venture valuations and the overall investment landscape. Emily Zheng, a senior research analyst at PitchBook, noted that the Series D+ step-up is clear evidence of how much AI is driving venture valuations. The report further highlights that acquisitions in 2026 have reached a decade high, with acquisition value totaling $375.4 billion and valuations increasing from 1.2 times last year to 1.9 times this year.

However, the report also reveals a mixed picture when it comes to individual deals. For example, ServiceNow's acquisition of Armis for $7.8 billion represents a notable increase from the cybersecurity company's previous valuation of $6.1 billion. In contrast, the secondary trading market reflects a more cautious approach, with startups that raised funds recently trading at a median discount of zero to 5%. This indicates that companies unable to secure strong funding terms are generally not raising capital at all, suggesting a tightening of the market for non-AI startups.

The findings from PitchBook's report illustrate a significant shift in the venture capital landscape, where AI companies are increasingly dominating the funding scene. The stark contrast in valuations and investment trends between AI and non-AI companies raises questions about the sustainability of this trend and the future of non-AI startups in a market that appears to be heavily skewed towards artificial intelligence. As the venture capital landscape continues to evolve, it remains to be seen how this will impact the broader technology ecosystem and the opportunities available for startups outside the AI sector.