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Crystal Ball: Where venture capital and private equity are headed in 2026

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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 assetsit’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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Joey Abrams curated the deals section of today’s newsletter. Subscribe here.

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.



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Oil prices rise as Iran crackdown suggests Tehran fears a ‘dire security threat to the regime’

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Crude oil futures pointed to continued gains on Sunday as markets weighed potentially transformative events in Iran, which has been wracked by protests across the country.

U.S. oil prices rose 0.56% to $59.45 a barrel, and Brent crude climbed 0.52% to $63.67 a barrel, as reports said President Donald Trump is weighing military options in Iran to follow through on his threats to attack if the government kills protestors.

Iran, which pumps 3 million-4 million barrels per day, has seen protests spread nationwide amid an economic crisis. Human rights groups estimate hundreds have died from the government’s crackdown, as the regime’s piecemeal attempts to appease Iranians have failed.

The government cut off internet access in the country last week, slowing the flow of information on the latest developments. But various reports and expert assessments indicate the unrest is posing a major threat to Tehran’s authority.

In particular, the security apparatus that keeps the leadership in power is showing cracks, according to the Institute for the Study of War (ISW).

“There are further indications that the ongoing protests are challenging the ability and willingness of Iranian security forces to crack down on the protests,” the think tank said in a recent report. “The IRGC Intelligence Organization released a statement on January 10 that it is ‘dealing with possible acts of abandonment.’ This statement suggests that some Iranian security forces may have already defected or that the regime is very concerned about this possibility.”

It cited additional reporting that pointed to some officers anticipating the regime’s collapse, forces in one city refusing to fire on protesters, and the possibility the government will deploy the regular army.

These rank-and-file troops, known as the Artesh, are less ideological and more representative of the Iranian population than the Islamic Revolutionary Guard Corps, ISW said. That raises the risk Artesh troops, who aren’t trained to handle civil unrest, could defect and indicates internal security forces are stretched thin, it added.

A separate analysis from ISW noted that the government is treating the protests as a military issue instead of a law enforcement one. It also said Tehran “has taken the rare step of using the IRGC Ground Forces to suppress protests because it has likely determined that these protests represent a dire security threat to the regime.”

Energy markets are digesting the implications of political upheaval in Iran, a top OPEC member with the world’s third largest proven oil reserves. In fact, anti-government protests have already spread to Iran’s oil sector with workers at a large refining and petrochemical complex going on strike.

Market tracker Kpler said in post on X on Saturday that Iran’s regime faces a tipping point and is under unprecedented strain.

“Though a full collapse remains a low-probability event, the rising risk is already lifting the geopolitical premium in oil markets. Any disruption—through factional conflict, export curbs or external intervention—could prompt near-term price spikes, despite global surpluses,” it added.

“Over the medium term, regime change could unlock sanctions relief and reshape trade flows, with European, Indian and Japanese refiners poised to benefit, while Chinese independents and Middle Eastern producers face stiffer competition.”



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Anthropic debuts Claude for Healthcare, partners with HealthEx for patient electronic health records

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AI lab Anthropic is making a major push into healthcare with the launch of Claude for Healthcare and an expansion of its life sciences offerings.

The announcement, timed to coincide with the start of the JPMorgan Healthcare Conference in San Francisco this week, comes just days after OpenAI unveiled ChatGPT for Health. That’s no coincidence and reflects the growing competition among leading AI labs to build specialized products for lucrative industries like healthcare, finance, and coding.

The Claude for Healthcare announcements include a partnership with HealthEx, a startup that allows patients to see all of their electronic medical records in a single place and control access to that data. The partnership includes a way for users to connect their personal medical records to Anthropic’s Claude in order to use the chatbot to answer health-related questions.

“HealthEx lets people bring their health records into a conversation with Claude and ask important questions in everyday language—What does this lab result mean? What should I bring up with my doctor? How has this number changed over time?—and get answers grounded in their own health history,” Amol Avasare, product lead at Anthropic, said.

The announcements also include a similar set of connectors for Function Health, a company that helps patients schedule lab tests and interpret the results, as well as integrations with Apple Health and Android Health Connect that will be rolling out to beta testers next week. For now, the connectors to HealthEx and Function Health are available to Claude Pro and Max subscribers in the U.S.

Health-related queries are among the leading consumer use cases of AI chatbots. But so far, Anthropic has been less focused on serving the general consumer market than its rival OpenAI, which boasts more than 800 million weekly users. Anthropic is thought to have far fewer consumer users and has instead concentrated on specialized use cases, such as software coding, that more naturally appeal to enterprise customers. It has pulled ahead of OpenAI in enterprise marketshare according to several recent surveys. It has also recently been creating more tailored versions of Claude to serve other industry or professional verticals, such as Claude for Financial Services and Claude for Life Sciences.

Anthropic has said it is interested in serving consumers as well as large organizations, and today’s announcements were aimed at both consumers and enterprise customers, such as hospitals, insurers, and pharmaceutical companies.

New offerings for healthcare providers, insurers, and pharma

The company said it was adding connectors to industry-standard databases including the Centers for Medicare & Medicaid Services Coverage Database, the International Classification of Diseases (ICD-10), the National Provider Identifier Registry, and PubMed.

These connectors are designed to help healthcare providers with tasks like speeding up prior authorization requests, supporting claims appeals, coordinating care, and triaging patient messages.

For life sciences companies, Anthropic is expanding beyond its initial focus on preclinical research to support clinical trial operations and regulatory work. New connectors include Medidata for clinical trial data and ClinicalTrials.gov. It is also launching connectors to bioRxiv and medRxiv—which are repositories for medical and biological research papers, usually before their findings have been peer reviewed; Open Targets, a database of identified drug targets; and ChEMBL, a database of bioactive compounds that could be used to make drugs.

The company is working with major healthcare and pharmaceutical companies including AstraZeneca, Sanofi, Genmab, Banner Health, Flatiron Health, and Veeva, among others. In a video clip Anthropic provided to reporters, it showed how Claude can now help a pharmaceutical company design a protocol for a Phase II clinical trial of a hypothetical drug designed to treat Parkinson’s Disease. It reduced the time it takes to draft the protocol design from many days to just about an hour.

Letting Claude use medical records to answer patient queries

Among the centerpieces of the new consumer health offerings is the partnership with HealthEx, which can help patients consolidate medical records from more than 50,000 health systems.

Fortune talked with executives from both companies exclusively about the new offering.

“Personal health records today are scattered across providers, and it can be difficult to get a complete view,” Avasare told Fortune. “HealthEx built a way to use Claude to unify those records with user consent and strong controls. Users decide what to share and can revoke access at any time, and their health data is never used for model training.”

HealthEx cofounders Priyanka Agarwal, now the company’s CEO, and Anand Raghavan, its CTO.

Photo courtesy of HealthEx

Users enable the HealthEx connector inside Claude, verify their identity, and connect their patient portal logins. HealthEx then unifies records across providers. When users ask Claude health-related questions, Claude uses Model Context Protocol (MCP)—an open standard Anthropic developed for connecting AI to external data sources—to securely retrieve relevant portions of the record for each specific question.

To enhance data privacy, Claude requests only the categories of information most likely to be relevant to a question—such as medications, allergies, recent lab reports, or doctor notes—rather than pulling an entire medical record. If relevance isn’t obvious, Claude can prompt users to broaden the scope, asking if they want to look further back in their history, Avasare said.

Priyanka Agarwal, cofounder and CEO of HealthEx, said the partnership addresses a fundamental problem in American healthcare: making it easier for consumers to access and understand their own health data.

“We’re giving every American a safe, private way for them to use their health data with AI,” Agarwal told Fortune. “We know that AI based on personal context is going to be more effective at providing support.” She said that by connecting medical records to HealthEx and HealthEx to Claude, users will get “responses [that] are grounded in your health history, not generic advice.”

According to Anthropic, the healthcare and life sciences announcements are possible because of recent improvements to Claude’s underlying capabilities. When tested on simulations of real-world medical and scientific tasks, Claude Opus 4.5, Anthropic’s latest model, substantially outperforms earlier releases. The company also said Opus 4.5 with extended thinking shows improvements in producing correct answers on honesty evaluations, reflecting progress on reducing factual hallucinations.



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Buddhist monks are walking barefoot from Texas to DC with their dog, drawing crowds across the South

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A group of Buddhist monks and their rescue dog are striding single file down country roads and highways across the South, captivating Americans nationwide and inspiring droves of locals to greet them along their route.

In their flowing saffron and ocher robes, the men are walking for peace. It’s a meditative tradition more common in South Asian countries, and it’s resonating now in the U.S., seemingly as a welcome respite from the conflict, trauma and politics dividing the nation.

Their journey began Oct. 26, 2025, at a Vietnamese Buddhist temple in Texas, and is scheduled to end in mid-February in Washington, D.C., where they will ask Congress to recognize Buddha’s day of birth and enlightenment as a federal holiday. Beyond promoting peace, their highest priority is connecting with people along the way.

“My hope is, when this walk ends, the people we met will continue practicing mindfulness and find peace,” said the Venerable Bhikkhu Pannakara, the group’s soft-spoken leader who is making the trek barefoot. He teaches about mindfulness, forgiveness and healing at every stop.

Preferring to sleep each night in tents pitched outdoors, the monks have been surprised to see their message transcend ideologies, drawing huge crowds into churchyards, city halls and town squares across six states. Documenting their journey on social media, they — and their dog, Aloka — have racked up millions of followers online. On Saturday, thousands thronged in Columbia, South Carolina, where the monks chanted on the steps of the State House and received a proclamation from the city’s mayor, Daniel Rickenmann.

The physical toll of the monks long walk

At their stop Thursday in Saluda, South Carolina, Audrie Pearce joined the crowd lining Main Street. She had driven four hours from her village of Little River, and teared up as Pannakara handed her a flower.

“There’s something traumatic and heart-wrenching happening in our country every day,” said Pearce, who describes herself as spiritual, but not religious. “I looked into their eyes and I saw peace. They’re putting their bodies through such physical torture and yet they radiate peace.”

Hailing from Theravada Buddhist monasteries across the globe, the 19 monks began their 2,300 mile (3,700 kilometer) trek at the Huong Dao Vipassana Bhavana Center in Fort Worth.

Their journey has not been without peril. On Nov. 19, as the monks were walking along U.S. Highway 90 near Dayton, Texas, their escort vehicle was hit by a distracted truck driver, injuring two monks. One of them lost his leg, reducing the group to 18.

This is Pannakara’s first trek in the U.S., but he’s walked across several South Asian countries, including a 112-day journey across India in 2022 where he first encountered Aloka, an Indian Pariah dog whose name means divine light in Sanskrit.

Then a stray, the dog followed him and other monks from Kolkata in eastern India all the way to the Nepal border. At one point, he fell critically ill and Pannakara scooped him up in his arms and cared for him until he recovered. Now, Aloka inspires him to keep going when he feels like giving up.

“I named him light because I want him to find the light of wisdom,” Pannakara said.

The monk’s feet are now heavily bandaged because he’s stepped on rocks, nails and glass along the way. His practice of mindfulness keeps him joyful despite the pain from these injuries, he said.

Still, traversing the southeast United States has presented unique challenges, and pounding pavement day after day has been brutal.

“In India, we can do shortcuts through paddy fields and farms, but we can’t do that here because there are a lot of private properties,” Pannakara said. “But what’s made it beautiful is how people have welcomed and hosted us in spite of not knowing who we are and what we believe.”

Churches, families and towns host the monks along their path

In Opelika, Alabama, the Rev. Patrick Hitchman-Craig hosted the monks on Christmas night at his United Methodist congregation.

He expected to see a small crowd, but about 1,000 people showed up, creating the feel of a block party. The monks seemed like the Magi, he said, appearing on Christ’s birthday.

“Anyone who is working for peace in the world in a way that is public and sacrificial is standing close to the heart of Jesus, whether or not they share our tradition,” said Hitchman-Craig. “I was blown away by the number of people and the diversity of who showed up.”

After their night on the church lawn, the monks arrived the next afternoon at the Collins Farm in Cusseta, Alabama. Judy Collins Allen, whose father and brother run the farm, said about 200 people came to meet the monks — the biggest gathering she’s ever witnessed there.

“There was a calm, warmth and sense of community among people who had not met each other before and that was so special,” she said.

Monks say peace walks are not a conversion tool

Long Si Dong, a spokesperson for the Fort Worth temple, said the monks, when they arrive in Washington, plan to seek recognition of Vesak, the day which marks the birth and enlightenment of the Buddha, as a national holiday.

“Doing so would acknowledge Vesak as a day of reflection, compassion and unity for all people regardless of faith,” he said.

But Pannakara emphasized that their main goal is to help people achieve peace in their lives. The trek is also a separate endeavor from a $200 million campaign to build towering monuments on the temple’s 14-acre property to house the Buddha’s teachings engraved in stone, according to Dong.

The monks practice and teach Vipassana meditation, an ancient Indian technique taught by the Buddha himself as core for attaining enlightenment. It focuses on the mind-body connection — observing breath and physical sensations to understand reality, impermanence and suffering. Some of the monks, including Pannakara, walk barefoot to feel the ground directly and be present in the moment.

Pannakara has told the gathered crowds that they don’t aim to convert people to Buddhism.

Brooke Schedneck, professor of religion at Rhodes College in Memphis, Tennessee, said the tradition of a peace walk in Theravada Buddhism began in the 1990s when the Venerable Maha Ghosananda, a Cambodian monk, led marches across war-torn areas riddled with landmines to foster national healing after civil war and genocide in his country.

“These walks really inspire people and inspire faith,” Schedneck said. “The core intention is to have others watch and be inspired, not so much through words, but through how they are willing to make this sacrifice by walking and being visible.”

On Thursday, Becki Gable drove nearly 400 miles (about 640 kilometers) from Cullman, Alabama, to catch up with them in Saluda. Raised Methodist, Gable said she wanted some release from the pain of losing her daughter and parents.

“I just felt in my heart that this would help me have peace,” she said. “Maybe I could move a little bit forward in my life.”

Gable says she has already taken one of Pannakara’s teachings to heart. She’s promised herself that each morning, as soon as she awakes, she’d take a piece of paper and write five words on it, just as the monk prescribed.

“Today is my peaceful day.”



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