Record Funding in Q1 2026 and Its Implications
Crunchbase reported that $300 billion flowed into startups in the first quarter of 2026, marking the largest quarter in venture history, with four companies absorbing $188 billion of that total, or 65%. Early-stage funding increased by 41% year over year, while AI/ML deal counts rose to 6,678 in 2025 from roughly 5,600 the previous year, indicating more opportunities for seed-stage founders despite concentration at the top. According to Crunchbase News, this data underscores a shift toward vertical AI-driven solutions in specific industries as advised by MGV’s Marc Schröder.
Shifts in Funding and Market Trends
Horizontal SaaS experienced a 35% decline over the past 12 months, while vertical SaaS saw a 3% increase, based on Redpoint’s 2026 Market Update. In Redpoint’s CIO survey, 58% of respondents cited AI as the top driver of increased software spend, expanding the addressable market from roughly $0.5 trillion in current U.S. enterprise software to potentially $6 trillion as AI enables new workflow executions. This reflects a broader trend where AI makes vertical software more valuable due to industry-specific compliance and proprietary data needs.
Building Strategies for Startups
Founders are encouraged to focus on specific industry workflows, such as claims processing in insurance or scheduling in healthcare, where software penetration has been low. AI is changing this dynamic by making it economically viable to address these niches, as noted in the source material. MGV, under Marc Schröder’s leadership as co-founder and managing partner, emphasizes building for acquirability by creating products that integrate into enterprise stacks and accumulate proprietary data.
Exits and Acquisition Landscape
In 2025, approximately 2,300 VC-backed startups were acquired compared to just 65 IPOs, according to Crunchbase data, with LPs facing nearly $200 billion in cumulative negative net cash flows since 2022. This environment pressures founders to build for M&A, targeting strategic acquirers in sectors like insurance and healthcare who buy vertical software companies due to their inability to develop such solutions internally. MGV has become a top-quartile firm, surpassing 95% of venture funds, through Schröder’s approach of providing sales training and fundraising strategies. According to Crunchbase News, this strategy supports founders in navigating the current market.
