The 2026 VC Landscape: Fewer Players, More Power, and the End of Easy Money
The venture capital market heading into 2026 looks different from what it did a few years ago. Fundraising timelines have stretched, exits have slowed, and LPs have become more selective. The question now is which emerging dynamics will separate the firms that thrive from those that fall behind.
After nearly a decade at Strut Consulting working with venture capital firms at every stage, from first-time funds to billion-dollar franchises, we're seeing patterns emerge across the industry that individual GPs might miss from inside their own operations. Three shifts in particular will separate the firms that adapt from those that don't.
These insights reflect observations from across Strut Consulting's leadership team, including Director of IR Vienna Poiesz, Director of Operations Zosia Ulatowski, and Director of Finance Lauren McDavid Victor, who work directly with the venture firms navigating these transitions.
Secondaries will move from side channel to core strategy
The shift toward secondaries isn't just an exit strategy anymore. For many firms, it's becoming a survival mechanism. Deal volume continues to shrink across the VC ecosystem, and there's been a notable shift toward creating liquidity via secondaries or writing scout-style checks as firms navigate capital constraints.
The secondary market will remain hot for creating liquidity and will become more mainstream, representing a significant portion of distributions in 2026. This isn't a temporary adjustment. It's a fundamental shift in how venture returns get realized.
The liquidity drought and elongated exit timelines are forcing funds to rethink their operating models and future fund strategies, from reserve allocation to fund pacing. Venture firms are increasingly turning to partial exits through secondaries, tender offers, and other liquidity engineering tools, exploring alternative financing structures for companies that aren't IPO or M&A ready.
There's a notable shift toward prioritizing realizable liquidity on shorter time horizons. Secondary markets will no longer be viewed as a side channel. They're becoming a core part of distributions, and LPs are starting to expect GPs to have a point of view on when and how to create liquidity beyond traditional exits.
For fund managers, this means understanding how to structure partial liquidity events and communicating these strategies clearly to LPs who may not be familiar with this approach. The gap between funds that can execute on secondary opportunities and those waiting for traditional exits will become stark in 2026.
LP negotiating power will concentrate in fewer hands
Here's what most GPs are missing about the LP landscape heading into 2026: this isn't necessarily about LPs being ruthlessly tougher on selection, though it is a factor. But the structural reality is that there are simply fewer allocators actively deploying into venture, which makes the current fundraising landscape incredibly competitive.
With distributions still slow, public markets not providing meaningful liquidity, and other asset classes offering more attractive yield with lower fee structures, capital is consolidating into a much smaller group of LPs who remain committed to the category. And that concentration creates real power.
Negotiating leverage will accrue to LPs who provide certainty: capital certainty, pacing certainty, and follow-on participation certainty. Large institutions will continue to influence terms because they stay in the market consistently. But here's the shift to watch: selective family offices and UHNW platforms that can write meaningful checks and bring incremental LPs with them will have as much, if not more, influence on fundraising outcomes. In a year defined by scarcity, introductions matter almost as much as commitments.
On the other end of the spectrum, funds of funds will have the least negotiating power. Many are struggling to raise their own capital, and GPs are increasingly skeptical about whether they truly have dollars to deploy. Unless a fund of funds signals clear, near-term conviction, they may find themselves sidelined in a market that prioritizes certainty above all else.
The pattern for 2026 is clear: fewer LPs deploying, more power concentrated in the hands of those who remain active, and terms shaped by whoever can give a GP confidence that the commitment will actually materialize. Fundraising timelines will need to lengthen, processes will need to tighten, and GPs will need to avoid reading too much into early enthusiasm that doesn't convert to binding commitments.
SAFE conversions will force portfolio recalibration
Portfolio recalibration will be a major theme in 2026, and much of it traces back to one instrument: the SAFE. Many companies raised multiple SAFE rounds during the downturn without true valuation milestones. Now, as these convert, they expose significant valuation mismatches and unclear ownership outcomes, forcing messy cap table restructurings.
This will impact fund metrics and performance narratives. GPs heading into fundraising will need to explain why their ownership in certain portfolio companies is lower than expected or why a company that looked promising on paper is now dealing with a cap table nightmare that makes follow-on rounds very complicated.
The SAFE itself isn't going anywhere. It's too embedded in early-stage fundraising to disappear. But GPs need to get significantly smarter about how they model these investments, communicate ownership stakes to LPs, and prepare for the conversion complications ahead.
Adaptation isn’t optional
The venture market in 2026 rewards one thing above all else: operational discipline. It's no longer enough to just pick good companies. The funds that thrive will be the ones that have built strong foundations across investor relations, finance, and portfolio management. In a market where fewer LPs are deploying and every commitment counts, this discipline will be what separates funds that continue to raise from those that fade into the background.
