Friends,
In last month’s newsletter, we highlighted how private equity accelerated exits amid rising liquidity pressure and how venture-backed startups leaned into record levels of founder-led mergers and acquisitions (M&A) to compete in an artificial intelligence (AI)‑intensified market. Both trends underscored the need for resilience under compressed timelines, with consolidation and creative liquidity tools becoming essential.
This month, we examine how record levels of startup‑on‑startup M&A and a sharp swing toward founder‑driven dealmaking are reshaping the venture landscape as AI competition intensifies. Consolidation is becoming a strategic necessity, while explosive early‑stage growth and a scarcity of technical talent are shifting pricing power decisively toward founders. Together, these forces signal a 2026 defined by scale, selectivity, and a market where adaptability matters more than ever.
The surge in startup‑on‑startup M&A is reshaping the venture capital (VC) landscape heading into 2026, signaling a market where competitive pressure, AI‑driven growth, and tightening fundraising standards are forcing founders to pursue scale through consolidation rather than capital alone. PitchBook data shows that startup buyers accounted for a record 38.4% of all VC‑backed acquisitions in 2025 — evidence that venture-backed companies now resemble public‑company operators, with cash, maturity, and strategic urgency driving them to acquire talent, technology, and market position. With AI creating dozens of competitors in every emerging category, acquisitions have become a path to survival and a mechanism for picking long‑term winners. The rising initial public offering (IPO) bar, now exceeding $500 million in revenue, is amplifying this trend: many companies will not reach the next financing milestone but can still find meaningful outcomes through full-team acquisitions and strategic combinations with better‑capitalized peers. The result is a market shaking out fast, rewarding strong execution and leaving little room for the “middle of the pack.”
At the same time, the dealmaking power dynamic is shifting, with founders now commanding pricing and terms at levels not seen since the 2021 boom. PitchBook reports that companies are hitting $100 million annual recurring revenue (ARR) in as little as five to eight months, emboldening early-stage teams and drawing large multi-stage funds into valuation‑agnostic bidding wars. A scarcity of elite AI talent, aggressive compensation from Big Tech, and the rise of high-dollar acqui-hire deals have further tilted leverage toward technical founders, allowing them to set terms while investors compete for allocation. Yet this founder-friendly environment comes with risk: some VCs warn of a return to overexuberance, pointing to rapid scale without sustainable margins and a market repeating its 2021 mistakes under a new banner. As consolidation accelerates and pricing power shifts to the earliest and fastest growers, 2026 will test whether this wave of optimism can translate into durable businesses — or whether discipline will again separate momentum from longevity.
As always, please do not hesitate to contact us if we can help you brainstorm solutions to a legal or business challenge you are facing or connect you to a potential investor, professional, or entrepreneur.
Spotlight on an Evening with Friends at the J.P. Morgan Healthcare Conference
An Evening with Friends at the J.P. Morgan Healthcare Conference | January 12, 2026
Foley & Lardner LLP, Armanino, Berkley Life Sciences, and Cristcot brought together an exceptional community of life sciences leaders for An Evening with Friends in San Francisco, transforming 25 Lusk’s industrial‑chic setting into a gathering place for C‑suite executives, pioneering founders, and top-tier venture and private equity investors shaping the sector’s next wave. The program captured the energy running through the broader conference: AI is rapidly shifting from a speculative talking point to a measurable catalyst for drug discovery, diagnostics, manufacturing, and commercial strategy, while life sciences companies are navigating a renewed environment for strategic partnerships and M&A. Conversations throughout the evening centered on how innovators are operationalizing AI in regulated environments, recalibrating capital strategy, and building readiness for a market in which collaboration, data credibility, and technical differentiation matter more than ever.
Attendees engaged in candid discussions on dealmaking momentum, the return of strategic acquirers, and the increasing importance of cross‑functional readiness in an industry where scientific breakthroughs are now intertwined with digital capabilities and real‑world evidence. Investors shared perspectives on diligence expectations in an AI‑accelerated landscape, while founders compared notes on scaling challenges and regulatory tailwinds. Overall, the night reinforced that the life sciences ecosystem is entering a period defined by convergence — between biology and computation, capital and capability, innovation and execution.
Events
Upcoming:
Super Bowl Summit — The Innovation Playbook: Databricks | February 4, 2026
In the lead-up to the Super Bowl in San Francisco this weekend, Foley, Redwood Collective, Protiviti, and SVB are hosting an exclusive Sidebar Summit with Dharmesh Thakker of Battery Ventures and NBA All‑Star and Hall of Famer Chris Webber, moderated by Louis Lehot, offering attendees a rare, inside look at the vision, obstacles, and hyper‑growth strategies that helped propel Databricks to a remarkable $100 billion valuation. This intimate gathering will bring together founders, operators, and investors eager to understand how category‑defining companies scale with speed and discipline. Guests can expect candid insights, real-world lessons, and a dynamic exchange of ideas from leaders who have navigated both the boardroom and big‑stage pressure. Apply to attend here.
Founder Match Night: A Utah Tech Week World Cup Mixer | February 4, 2026
Foley is excited to co-host alongside Premara Group, Amplēo, and AllianceBernstein, the Founder Match Night: A Utah Tech Week World Cup Mixer with a high‑energy blend of competition and community at Calle’s downtown Salt Lake City headquarters. Attendees can expect an indoor four versus four street‑soccer tournament, FIFA matches, music, drinks, and tacos — creating a dynamic environment where founders, operators, and investors come together before a week of tech programming. Designed as both a mixer and a warm‑up for the excitement of the 2026 World Cup, the event aims to spark new connections and set the tone for Utah’s innovation community.
Asian American New Year Winter Gathering | February 5, 2026
Foley is proud to support the Asian American New Year Winter Gathering, an intimate evening designed to bring together Asian American and Pacific Islander (AAPI) founders and investors for connection, community, and a thoughtfully curated Napa Valley wine‑tasting experience, alongside Colliers International, Gold House Ventures, SVB, and New Century Insurance Services. Set in the heart of the Bay Area’s vibrant tech ecosystem, the event creates space for candid conversations, shared wins, and authentic relationship‑building among leaders who understand the unique challenges and triumphs of the AAPI journey.
The Business of Sports | February 5, 2026
Foley is thrilled to co-sponsor an exclusive program bringing together visionaries, investors, and athletes who are shaping the future of sports, technology, finance, and entertainment. The afternoon will feature a series of dynamic conversations with industry icons — including College Football National Champion, Super Bowl Champion, and Heisman Trophy winner Reggie Bush — alongside leaders from Comcast, PATH Water, StatusPRO, the Tennessee Titans, Hunterbrook Media, and more. From game‑changing name, image, and likeness (NIL) dynamics to the evolution of sports advertising, emerging leagues, and athlete‑driven business ventures, the program offers a rare, behind‑the‑scenes look at the forces redefining competition and culture.
Cross Creek’s 2026 Mountain Mingle | February 5–6, 2026
Foley is proud to be a sponsor of Cross Creek’s 2026 Mountain Mingle, set to bring founders, investors, and operators together in Park City for a curated two‑day experience that blends high‑touch programming with the energy of Utah Tech Week. The event will open with an intimate private showcase at The Kimball Terrace before guests head to Empire Canyon Lodge for an evening Mountain Mingle dinner, supported by seamless shuttle logistics and a relaxed, mountain‑casual atmosphere. The following day will take attendees slope‑side at Deer Valley for group skiing, a hosted lunch at Silver Lake Lodge, and the debut of the Downhill Dash slalom race — creating a dynamic environment for meaningful connection, fresh conversations, and shared time on the mountain across the tech and venture community.
Venture Capital Wine Dinner | February 12, 2026
Foley and Customers Bank are hosting an intimate Venture Capital Wine Dinner, bringing together founders, investors, and industry leaders for an evening of great conversation, exceptional food, and standout California wines. Guests will enjoy a curated selection. The evening begins with drinks and mingling, followed by a seated dinner, creating the perfect setting for authentic dialogue, new relationships, and relaxed networking among peers shaping the venture ecosystem.
Q1 2026 Fusion Expert Network (FXN) Dinner | February 25, 2026
Foley is excited to sponsor the Q1 2026 Fusion Expert Network (FXN) Dinner in Palo Alto, an intimate gathering curated to foster high‑value connections between institutional investors and senior leaders shaping the future of AI and health care innovation. This exclusive evening convenes members of the FXN Network — AI leaders from OpenAI, Google, NASA, Meta, Apple, Tesla, and other transformative organizations — alongside visionary Fusion Fund portfolio founders building next‑generation AI companies. Guests will also enjoy a special appearance by Olympic gold medalist Kristi Yamaguchi, who will join the dynamic conversation. The dinner offers a rare opportunity for candid dialogue, strategic relationship‑building, and cross‑disciplinary insight among a select group of industry trailblazers.
M&A / Transaction Summit & Ski Day | February 25, 2026
Foley is co-hosting, alongside Tanner, BMO, and HGGC, an intimate, M&A‑focused breakfast panel set against a stunning mountain backdrop, bringing together founders, operators, and deal‑makers for real stories, practical insights, and candid discussion around navigating the acquisition journey. After a morning of conversation and targeted networking, guests will take the dialogue to the slopes with an afternoon of skiing at Deer Valley Resort before reconvening later at the lodge for appetizers, drinks, and relaxed connection — creating a full‑day experience intentionally designed for perspective, relationship‑building, and fresh mountain air.
Recent:
Inside the Board — CEO Dynamic: Trust, Alignment, and 2026 Governance Priorities | January 28, 2026
Foley was honored to partner with NACD Northern California, where Louis Lehot and Kelly Boyd welcomed a distinguished group of directors and governance leaders for a candid discussion on the evolving board-Chief Executive Officer (CEO) dynamic and the priorities shaping governance in 2026. The program offered practical insights on balancing engagement with oversight, building trust through transparency, and fostering a healthy culture rooted in alignment and accountability. Conversations also explored how boards can navigate friction points, support CEO performance, onboard new directors effectively, and manage shareholder expectations amid the unique pressures of private and VC‑backed environments.
Growth Elevated Ski + Tech Summit | January 12–14, 2026
Foley was proud to be a sponsor of this year’s Growth Elevated Ski + Tech Summit, a three‑day gathering at the intersection of innovation and altitude that brought together founders, executives, and investors driving the next wave of technological and capital market transformation. Designed as a curated experience rather than a traditional conference, the Summit blended strategic conversations with intentional networking and time on the mountain, giving participants space to exchange real‑world insights on AI, automation, and growth while forming meaningful connections. Between deal‑flow discussions, small‑group sessions, and Utah’s world‑class skiing, attendees engaged in the kind of high‑signal dialogue that fuels long‑term collaboration.
Thought Leadership
Stablecoins vs. Bitcoin in 2026: Regulation, Realignment, and the New Digital Asset Market Structure
The 2026 digital asset outlook reflects a market finally pricing in its own maturity, driven by regulatory clarity that transformed crypto from an experimental sector into institutional infrastructure. Stablecoin legislation, market‑structure rules, and global regulatory alignment have shifted stablecoins from speculative products to powering tokenization, enterprise payments, and cross‑border commerce — with circulation projected to surpass $1 trillion as demand becomes operational rather than speculative. Bitcoin, meanwhile, has evolved from a trade into a macro allocation, solidified by Exchange-Traded Fund (ETF) inflows and institutional adoption that make it behave more like an emerging commodity‑foreign exchange (FX) hybrid than early‑stage crypto, even as it remains sensitive to global liquidity and geopolitical cycles. The key dynamic in 2026 is that stablecoins and Bitcoin are not competing narratives but complementary pillars of a maturing ecosystem: stablecoins anchor settlement and finance, while Bitcoin anchors portfolios and hedging strategies. As regulation becomes fully priced in, digital assets move from the periphery to the core of financial architecture, marking the start of the institutional era rather than another hype cycle.
The State of Venture Capital: A Look Back and Ahead
Venture activity heading into 2026 reflects a market that has regained momentum but not balance, with capital pooling aggressively around AI while the broader ecosystem continues to recalibrate. Global VC funding surged in 2025, yet deal count fell sharply, revealing an investment environment driven by concentrated conviction rather than widespread risk-taking. Mega‑rounds dominated the landscape as investors funneled unprecedented amounts into AI companies, which captured nearly half of all venture dollars and produced the majority of new unicorns. Robotics — especially humanoid systems — became one of the year’s standout beneficiaries, alongside AI model developers and the broader category of “physical AI,” which now ranks among the highest‑momentum markets. Adjacent sectors such as defense tech, quantum computing, fintech, and advanced manufacturing also saw meaningful acceleration, signaling that investors are prioritizing technologies with tangible impact and long‑term defensibility. With M&A activity rising, the IPO window slowly reopening, and valuations continuing to climb, the market is entering 2026 with strong tailwinds — but those tailwinds are powered by a narrower set of bets, making the year ahead a test of whether concentrated enthusiasm for AI and automation can translate into durable, ecosystem‑wide recovery.
Looking for a Lawyer in 2026? Choose Wisely: Your Business (and AI Strategy) Is at Stake
As 2026 begins, entrepreneurs are reevaluating what it means to have the “right lawyer,” especially in an era where AI tools and large language models (LLM)‑powered do-it-yourself (DIY) approaches have become ever-present — but far from sufficient. Legal risk now spans far beyond contracts and corporate housekeeping into areas like AI governance, data stewardship, cybersecurity, and cross‑border compliance, making experienced counsel a strategic necessity rather than a luxury. The lawyer who can meaningfully support a business today must anticipate problems before they emerge, align legal strategy with corporate goals, and guide founders through decisions that shape everything from entity structure and early equity allocations to capital formation, IP protection, and the integration of AI into core products. Fit matters: the attorney who handled formation may not be the one you need when scaling globally, preparing for a financing, or facing a bet‑the‑company moment. In a landscape where valuations rise, regulatory scrutiny intensifies, and transparency is constant, founders must ask whether their counsel has the bandwidth, technological fluency, network, and judgment to navigate complex growth. Choosing the right legal partner — one with stage‑appropriate experience, clear communication, and the ability to translate emerging risk into competitive advantage — may be one of the most consequential decisions a business makes.
Deals
Foley Advises Kaia Health on $285M Sale to Sword Health
Foley advised Kaia Health, a digital therapeutics company focused on musculoskeletal (MSK) and pulmonary care, on its $285 million sale to Sword Health.
Foley Advises SkyWater Technology in Agreement to be Acquired by IonQ
Foley served as legal advisor to SkyWater Technology, the largest exclusively U.S.-based, pure-play semiconductor foundry, in its definitive agreement to be acquired by IonQ Inc., the world’s leading quantum platform company, in a cash-and-stock transaction valuing SkyWater at approximately $1.8 billion.
Foley Represents Blockstream in Acquisition of Elysium Lab and European Expansion
Foley represented Blockstream, the global leader in Bitcoin-powered financial infrastructure, in the acquisition of Lugano-based digital asset company Elysium Lab. The deal will mark the official launch of Blockstream CH SAGL, Blockstream’s new European headquarters and incubator entity.
Foley Counsels United Theranostics in Financing with Courage Capital
Foley served as legal counsel to United Theranostics, a leading provider of radiopharmaceutical therapy and supportive molecular imaging for cancer treatment, in its recent financing with Courage Capital.
Foley Represents TCGX as Investor in $287M Series D1 Financing for CORXEL
Foley represented TCGX Crossover (TCGX) as an investor in the $287 million Series D1 financing for CORXEL, a clinical-stage biopharmaceutical company dedicated to developing innovative therapies for patients with cardiometabolic conditions around the world.
Foley Represents DLB in Sale of Majority Stake to Accenture
Foley represented DLB Associates and its affiliated companies (collectively “DLB”), an industry leader and trailblazer in engineering and consulting services for data centers and related mission critical facilities, in the sale of a majority stake to Accenture (NYSE: ACN).
Foley Guides DiversiFi.ai in $8M Funding Raise
Foley served as legal advisor to DiversiFi, the AI-powered profit optimization platform for third-party logistics providers, in its $8 million funding round led by Utah-based investors Sorenson Capital, Kickstart, and Peterson Ventures.
Foley Represents Carbide Ventures in Series Seed Investment in WALT AI
Foley represented Carbide Ventures in its series seed investment in WALT AI Inc., a developer of an AI-powered data context engineering platform designed to transform enterprise structured data into trusted, consistent, and immediately usable insights for decision-making.
Foley Guides Wasabi Technologies in $70M Equity Funding Round
Foley served as legal advisor to Wasabi Technologies, the Hot Cloud Storage company, in its $70 million equity funding round led by L2 Point Management with participation from Pure Storage and existing investors, including Fidelity Management & Research Company.
Foley Advises TensorWave in 20 MW Data Center Expansion with TECfusions
Foley represented TensorWave, an AMD‑backed cloud and AI-hyperscaler running next gen AMD accelerators for high-performance AI workloads, in connection with the expansions of space and power at two TECfusions data center facilities.
Foley Advises Rivet Health in Acquisition by Zelis
Foley served as legal advisor to Rivet Health Inc., a leader in revenue cycle analytics, in its acquisition by leading health care technology solutions provider Zelis.
Foley Represents Samsung Ventures as Investor in $58M Funding Round for WitnessAI
Foley represented Samsung Ventures as an investor in the $58 million funding round for WitnessAI, the AI security platform trusted by leading enterprises. The round was led by Sound Ventures and included additional investors Fin Capital, Qualcomm Ventures, and Forgepoint Capital Partners.
Foley Guides Hampton Golf-Managed Southern Hills Plantation Club in Sale to Heritage Golf
Foley served as legal advisor to Hampton Golf-managed entities in their sale of Southern Hills Plantation Club to Heritage Golf Group.
Foley Advises HonorHealth in Acquisition of Evernorth Care Group
Foley served as legal advisor to HonorHealth, a leading Arizona nonprofit health care system, in its acquisition of Evernorth Care Group from The Cigna Group.
Additional Articles of Interest
Louis Lehot and Patrick Daugherty Give Guidance on Crypto-Asset Strategy
Louis Lehot Publishes on Global Digital Asset Ecosystem
Louis Lehot and Kelly Boyd Publish on Corporate Board Evaluations
Author
Louis Lehot
Partner, Venture Capital
Silicon Valley | San Francisco | Los Angeles