As I was wading through the waters of all our predictions, readers painted a picture of possibilities and pressure in the private markets.
AI, on one hand, is a force multiplier—on the other, it will be unevenly impactful and the losses as the industry consolidates will be staggering. Liquidity, meanwhile, is making a comeback, albeit with a new normal. Velocity is increasing, but so is fragility.
There was also an echo of “bigger, fewer, and with more power,” that the wave of capital concentrating at the largest firms across the private markets is undeniable—and that the middle of the pack is in danger. The message from many of you: Only stark differentiation and scale will survive. Here’s what Term Sheet readers believe 2026 and beyond hold for the various corners of the private markets.
Note: Answers have been edited for clarity and brevity.
Private equity
2026 will be a year where private equity accelerates their pace of deal making. Four years of capital deployment exceeding distributions has created an environment where firms will need to focus on a return of capital rather than a return on capital. This will translate to more M&A, more IPOs and more continuation vehicles. —Jason Greenberg, global co-head of technology, media, and telecommunications investment banking, Jefferies
Private equity transaction volume will rise roughly 20% in 2026 versus 2025, building on late-2025 momentum as investors take advantage of more attractive entry valuations. —Gil Mermelstein, West Monroe CEO
The current steady decline in interest rates is meaningful, since over the last few years, the private equity market has been operating in a tighter regime. As the cost of capital falls, the entire stack improves, liquidity increases, and activity across markets tends to pick up. —Andrejka Bernatova, founder and CEO, Dynamix
Improving exit markets, strong secondary demand and the growing use of continuation vehicles point to a private equity ecosystem that is becoming structurally more liquid. In 2026, we believe LPs and GPs will have greater flexibility to manage pacing and fundraising, rebalance portfolios and extend ownership of high-conviction assets, which should support a more stable market environment and long-term value creation. —Shane Feeney, managing director and head of secondaries, Northleaf Capital Partners
While macro uncertainty persists into 2026, sectors characterized by defensive demand and operational upside will increasingly attract capital. In this environment, private equity returns are driven less by multiple expansion and more by execution, scale efficiencies, and mission-critical relevance. —Aditya Govil, vice president, VSS Capital Partners
Looking ahead to 2026, there is a growing expectation that inflation, tariffs, and geopolitical uncertainty could contribute to slower economic growth. For private equity, persistently higher interest rates, valuation pressure, and a challenging fundraising landscape may elevate firms that have deeper operational capabilities and a clear strategy for creating value over time. —Greg Fine, member and cochair, private equity practice, Mintz
Venture capital
One of the ‘venture firms’ that raises $10B at a time will launch a mutual fund in 2026 to gather more assets—it’s just what they do. It’s the same logic as why bank robbers rob banks: that’s where the big money is. With the loosening of 401(k) regulations, they may even be able to tap into retirement funds. The simple truth is that fees are easier to collect than carry, so the biggest firms will keep finding ways to get bigger. —Greg Sands, founder and managing partner, Costanoa
The “generalist middle” is collapsing. Capital is consolidating around mega-funds (like Sequoia, Andreessen, Thrive) and niche specialists, leaving generalist firms without a clear edge struggling to survive. —Bobby Ocampo, cofounder and managing partner, Blueprint Equity
The LP base will continue to consolidate around fewer, larger institutional backers. As newer LP entrants retreat from the market, managers will rely more heavily on long-standing institutions writing bigger, fewer checks. This will make fundraising significantly harder for emerging managers and increase pressure to experiment with alternative fee and carry structures to stay competitive. —Peter Walker, head of insights, Carta
Another generation of newer VCs will get stuck with report cards showing they invested at the top and have no hopes of seeing anything but a W2 paycheck. —Ilya Sukhar, general partner, Matrix
LP negotiating power will remain unusually high in 2026, driven by the structural reality that there are fewer allocators actively deploying into venture. Negotiating leverage will accrue to LPs who provide certainty: certainty of capital, pacing, and follow-on participation. Large institutions will continue to influence terms, but selective family offices and UHNW platforms that can write meaningful checks and bring incremental LPs will have as much, if not more, influence. —Vienna Poiesz, director of investor relations, Strut Consulting
By 2026, family offices and sovereign wealth funds will increasingly fill the catalytic-capital gap that venture isn’t structured to support. —Tenzin Seldon, general partner, Pulse Fund
Startups
Copycat AI startups hit a wall. Many founders are building the same idea with the same model and the same underlying foundation models. These markets turn into price wars with thin margins. Very few will break out. The real upside is in categories people are ignoring. If you are the 10th company in a hot space, you are signing up for a tough road. —Immad Akhund, cofounder and CEO, Mercury
The toughest challenge for founders next year will be leading with discipline in a market that’s still resetting. Founders should prepare by tightening fundamentals, including margin, retention, and cash management. The best stories in 2026 will be about smart execution, not just vision. —Robin Tsai, general partner, VMG Partners
We will see the term du jour in AI startups shift from agentic to super-intelligent. Correspondingly, there will be many more startups using “.si” instead of “.ai” domains.” —Chris Eng, principal, Sands Capital
In 2025, we’ve seen the best startups grow from $0 to $100 million revenue in record time. In 2026, we expect the trend to accelerate and may even see a $0 to $1 billion club emerge, especially as we continue to project an increase in AI adoption from companies and consumers alike. —Michael Paulus, founder and CEO, PCM Encore
At least a dozen companies will raise billion-dollar seed rounds in 2026 — not companies being valued at a billion, but companies raising a billion at seed stage. Maybe we can call one a pegasus? —Richard Socher, cofounder and CEO, You.com, and cofounder and managing partner, AIX Ventures
In 2026, for better or worse, the startups already drawing disproportionate reporter interest will start to dominate headlines and create buzz, including: ad tech for AI search, religion tech, science-trained foundation models (physics, chemistry, biology—not language), and AI for dating and companionship. —Emilie Gerber, founder and CEO, Six Eastern
In 2026, we will see a surge in startup formation and new product releases at a scale the industry has never witnessed, driven by the unprecedented fluidity from idea to software product, now possible even without technical knowledge. —Aaron Holiday, cofounder and managing partner, 645 Ventures
See you tomorrow,
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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VENTURE CAPITAL
– xAI, the Palo Alto, Calif.-based developer of the Grok AI model, raised $20 billion in Series E funding from Valor Equity Partners, Stepstone Group, Fidelity Management & Research Company, Qatar Investment Authority, and others.
– LMArena, a San Francisco-based developer of an open platform designed for comparing and testing new AI models, raised $150 million in funding. Felicis and UC Investments led the round and were joined by Andreessen Horowitz, The House Fund, LDVP, Kleiner Perkins, and others.
PRIVATE EQUITY
– Hg agreed to acquire OneStream, a Birmingham, Mich.-based enterprise finance management platform, for approximately $6.4 billion. General Atlantic and Tidemark are taking minority stakes.
– Artis BioSolutions, backed by Oak HC/FT, agreed to acquire Syngoi Technologies, a Zamudio, Spain-based biotech company looking to manufacture synthetic DNA technologies. Financial terms were not disclosed.
– Coalesce Capital announced a majority recapitalization of Marshall & Stevens, a Los Angeles, Calif.-based valuation and appraisal company. Financial terms were not disclosed.
– FormativGroup, backed by Rockbridge Growth Equity, acquired Eon Collective, a Boise, Idaho-based data integration modernization, and governance services company. Financial terms were not disclosed.
– Howden, backed by General Atlantic, La Caisse, and Hg, agreed to acquire Atlantic Group, a New York City-based independent transaction liability insurance broker. Financial terms were not disclosed.
– PPC acquired NaturPak, a Janesville, Wis.-based manufacturer of bone broths, soups, sauces, and wet pet food. Financial terms were not disclosed.
– Windjammer Capital acquired MFG Chemical, a Chattanooga, Tenn.-based manufacturer of polymers, surfactants, and other specialty chemicals. Financial terms were not disclosed.
EXITS
– Flexera, backed by Thoma Bravo, acquired ProsperOps, an Austin, Texas-based cost optimization platform designed for Amazon Web Service, Azure, & Google Cloud, from H.I.G. Capital. Flexera also acquired Chaos Genius, a Palo Alto, Calif.-based developer of AI agents designed for data & cost optimization on Snowflake and Databricks. Financial terms were not disclosed.
OTHERS
– Amgen acquired Dark Blue Therapeutics, an Oxford, U.K.-based developer of oncology medicines, for up to $840 million.
IPOS
– PicPay, a Sao Paolo, Brazil-based digital bank, filed to go public on the Nasdaq. The company posted $1.7 billion in revenue for the year ended September 30. J&F International and Banco Original back the company.
FUNDS + FUNDS OF FUNDS
– BV Investment Partners, a Boston, Mass.-based private equity firm raised $2.5 billion for its seventh fund focused on companies in the business services and information technology services sectors.
PEOPLE
– Gamut Capital Management, a New York City-based private equity firm, promoted Noah Leichtling as Chief Operating Officer. The firm also promoted Michael Jordan and Drew Kobasa to Principal.
– TSG Consumer, a Larkspur, Calif.-based private equity firm, promoted Alec Fogarty and Sam Pritzker to Managing Director. The firm also promoted Kelly Pease to Principal.