Three Mega Trends in Venture Capital

STARTUPS, ON SATURDAY   

The entire innovation economy is powered by venture capital. In 2026, roughly four out of every five venture dollars were sucked into one area – Artificial Intelligence. Is venture capital changing its very core? What are some of the mega trends that are shaping venture capital today? Two Saturdays ago, I wrote about the power law in venture capital and what makes investors hunt for giants in the making. This week, I am writing about where they are hunting and why this asset  class needs to go mainstream. Three large mega trends shaping the map of the world’s risk capital. 

First, AI dominance. Most reports by private market sources like NVCA, Pitchbook and Crunchbase indicate that 75%-80% of venture money is flowing into AI. The size of venture rounds has exploded and each quarter we see some of the largest venture rounds ever recorded. Some experts are calling it a bubble. This innovation is impacting everything from power, data centers, chips, software, math, science, medicine, physical things, and, as some would say, the fabric of humanity itself. That is sucking up capital from every other part of the economy. This concentration has never happened before. Not even in the dot com years. 

Second, Deep Tech and Energy Transition. While AI takes the lion's share, geopolitical developments and the quest for economic independence have had some venture capitalists bet on the physical world: batteries, green hydrogen, advanced materials, space, semiconductors. We are seeing this in the headlines in India as well. India already has 4,200 deep tech startups. The government has announced its conviction with backing: a one lakh crore rupee Research,  Development and Innovation scheme, a dedicated deep tech fund of funds and production  incentives for clean energy. To quote a leading VC, the next set of fund returners will be labs. 

Third, Maturing Private Markets. There are about 2000 Unicorns or billion dollar private  companies (startups) in the world. India has 120 of them. Companies no longer need to list on a stock exchange to raise the money needed to fund large scale ambition. The private markets are giving access to this capital. More than 9 trillion dollars of assets now sit in the private markets. 

Most financial advisors expect the private markets to outperform public ones. Many wealth managers are actively advising clients to allocate a meaningful percentage of their portfolio to private markets and alternate assets. Larry Fink, the CEO of Blackrock, wrote about this in his shareholder letter. Many other CEOs of financial institutions have followed. Private markets are going mainstream.  

I watch the third trend from my vantage point at work. Substantial wealth is getting created in the private markets – for venture capitalists, the wealthy institutions and families that back them  and also the employees that work in these innovative private companies. New graduates want to  work in startups; people want to invest a portion their wealth into startups and private market  funds. This is private markets maturing and going mainstream. 

For everyone out there, these currents will impact your daily life sooner than you think. Whether  it is AI you use on a daily basis, the electric mobility you use for your commute, or the fund that  your financial advisor is asking you to invest into, these megatrends will impact you one way or  another. 

P S: Why it matters: Venture money is a leading indicator or the technologies, companies and jobs that will show up in your life tomorrow. Follow the money closely. It is redrawing the map of the next decade

 - Ravi Ravulaparthi

CEO & Cofounder, Qapita