Your Daily Venture Capital Briefing

Venture Capital Shifts to Hardware Bets as AI Faces Trillion-Dollar IPO Test

• Venture capital is increasingly pivoting towards hardware and "physical AI" investments, moving beyond purely software-focused AI companies. This strategic shift is driven by the pursuit of new revenue opportunities in foundational infrastructure, as the AI landscape matures.

  Morningstar

• The UK venture capital market experienced a significant rebound in Q1 2026, with startups raising an impressive $7.8 billion, marking a 60% increase from Q1 2025 and the strongest start to a year since 2022. AI startups alone accounted for a substantial 70% of total VC investment in the UK during this period, securing $5.8 billion.

  Bristows

• PitchBook warns that three upcoming mega-IPOs in 2026 represent a "trillion-dollar test" for the venture capital asset class, with their performance potentially determining the industry's trajectory. This comes as most unicorn IPOs from 2025 are currently trading below their initial closing prices, highlighting increased market volatility and investor caution.

  Investordaily Com Au

• In a notable development for individual investors, Malaysia's Co-Investment Fund (MyCIF) is enabling access to later-stage, VC-backed private companies through equity crowdfunding (ECF) platforms. Gobi Partners and OSK Ventures International Bhd are among the first venture capital firms to commit to this framework, allowing qualified investors deal-by-deal exposure rather than requiring commitment to a blind-pool fund.

  Klsescreener

• South Korean semiconductor startup XCENA secured $135 million in Series B funding, valuing the company at $570 million. XCENA is developing the MX1 chip, designed to merge DDR5 memory with RISC-V compute cores, aiming to reduce AI inference server counts by up to tenfold.

  Mlq Ai