VCs tighten checks on founders

Tech Brew reported on May 15 that venture capital firms are still writing checks in 2026, but founders are facing a more selective market than they did during the last funding boom. The article, published with Fidelity Private Shares, said investors are writing fewer but larger checks and concentrating more capital in AI and late-stage companies. Fidelity Private Shares, citing PitchBook data through Dec. 31, 2025, said founders now need clean equity records, financial discipline and a more specific fundraising story to compete for capital. ### Why are founders hearing that money is available but harder to win? Fidelity Private Shares said 2025 was the weakest U.S. VC fundraising year in a decade, with 558 funds raising $66.5 billion. At the same time, the firm said dry powder from prior vintages is still being deployed, which helps explain why capital remains available even as the market has become more selective. (techbrew.com) PitchBook data summarized by Fidelity Private Shares showed a split market in 2025: overall U.S. deal volume fell again, but total deal value reached its highest level since 2021. The firm said that meant fewer companies were being funded, while later-stage and AI-linked companies were still able to raise larger rounds. (techbrew.com) ### What are investors screening for more aggressively in 2026? Fidelity Private Shares said the market in 2026 is "more selective, more concentrated, and more disciplined than it has been in years." In its guidance to founders, the firm said investors want defensibility to be tangible, pointing to proprietary data, regulatory advantage, workflow lock-in and distribution strength as examples. (fidelityprivateshares.com) The same report said founders should tighten cap table accuracy, option-pool clarity, board consents and financing documentation before they start a process. Fidelity Private Shares said those mechanics can shorten time-to-close in a market where extra friction can cost a company more. ### Where is the money concentrating? (fidelityprivateshares.com) Fidelity Private Shares said the Bay Area accounted for 53% of all U.S. venture financing in 2025. The firm also said New York reached a record 70.9% software share of deal value, while Boston remained strongest in biotech and pharma. KPMG said global VC investment rose to $330.9 billion in the first quarter of 2026 from $128.6 billion in the fourth quarter of 2025, but the increase was driven largely by a handful of very large AI rounds. (fidelityprivateshares.com) Five U.S.-based companies accounted for $188.6 billion of global VC investment in the quarter, led by OpenAI's $122 billion raise, Anthropic's $30 billion raise and xAI's $20 billion raise, according to KPMG. ### Why are broad AI pitches landing less cleanly? KPMG said investors in the first quarter of 2026 continued to back AI heavily, but interest also extended to industry-focused applications such as legal technology, energy management, robotics and autonomous vehicles. Fidelity Private Shares similarly told founders they do not need to be an AI company, but they do need to explain their position within or adjacent to the AI ecosystem. (assets.kpmg.com) That screening standard favors startups that can show a concrete hold on a workflow, a cost advantage, a distribution edge or some other operational barrier to entry, according to Fidelity Private Shares' examples of defensibility. The firm did not frame that as a retreat from AI, but as a demand for sharper proof that a company's product can keep customers and justify spending. (assets.kpmg.com) ### What does that change in a founder's pitch deck? Fidelity Private Shares said founders heading into 2026 should recast their fundraising narrative around timing, traction and what the firm called inevitability. The report also advised companies to model longer fundraising timelines and slower follow-on rounds, reflecting a market that is still active but less forgiving. (fidelityprivateshares.com) Tech Brew said the 2026 report draws on deal, fund, valuation and exit data across the Bay Area, New York and Boston through Dec. 31, 2025. Founders looking to benchmark their own process can find the full Fidelity Private Shares report on the firm's site, alongside a separate April 2026 post breaking out what the company said the latest data means for 2026 fundraising. (techbrew.com) (fidelityprivateshares.com)