Steve Lord is the Chief Operating Officer and Chief Knowledge Officer at Burkland, where he helps founders and investors navigate complex financial and operational decisions across every stage of growth. As a long-time advisor working deep inside the startup ecosystem, Steve brings a grounded, macro-aware perspective on how market forces show up in founders’ day-to-day realities.
In this episode of Startup Success, Steve joined the show to unpack what really happened in 2025, and why he believes 2026 could mark a meaningful shift for early-stage founders.
Why Early-Stage Funding May Rebound
Our conversation started with a look back to 2025, which Steve describes as a year defined as much by what didn’t happen as what did. Many expected faster interest rate cuts and a stronger rebound in venture activity by midyear, but volatility and uncertainty pushed those expectations out.
That uncertainty disproportionately affected Seed through early Series B startups. While massive AI rounds continued to attract capital, companies with small teams, early revenue, and a need to prove scale often found themselves stuck in the middle.
2025 is two stories. It’s what happened, but it’s also what didn’t happen.
~Steve Lord
Looking ahead, Steve expects this dynamic to improve. As capital begins to move off the sidelines, funding is likely to widen beyond a handful of dominant players. For founders at the Seed and Series A stage, that could mean more active conversations and a healthier financing environment, even if fundraising remains competitive.
The Broader Economic Outlook Founders Should Watch
Despite the volatility of 2025, Steve sees signs of underlying strength. Markets have absorbed geopolitical shocks, policy uncertainty, and trade tensions without collapsing. That resilience suggests a base case of gradual normalization rather than crisis.
Key indicators to watch in early 2026 are inflation trends, interest rates, employment data, and credit stress. Rising delinquencies or tightening credit could signal lagging economic weakness, while stable jobs and easing inflation would support a more favorable environment for startups.
Founders should stay informed about the macro backdrop while keeping expectations realistic.
Interest Rates in 2026 and What Could Trigger Cuts
Steve has long believed that interest rates would eventually come down, but the resilience of the core economy delayed that outcome. Strong employment and stubborn inflation limited the Fed’s ability to act in 2025.
In 2026, the conditions may finally shift. Steve points to several factors that could create room for rate cuts: easing inflation pressures, potential tariff rollbacks, declining energy prices, and political pressure on Fed leadership. Together, these could open the door to one or two rate cuts by midyear.
Lower rates matter for startup founders because they tend to loosen capital markets. Cheaper money can improve investor risk appetite, increase venture deployment, and ease pressure on valuations and deal terms.
A Rebound Doesn’t Make Fundraising Easy
Even if early-stage funding activity improves this year, Steve is clear that founders shouldn’t confuse a better market with an easy one. Venture has always been a numbers game, and that reality hasn’t changed. More capital moving simply means more attempts and more conversations, not guaranteed outcomes.
What has changed is the bar. Investors are filtering faster and more aggressively, especially in saturated categories like AI. Generic positioning no longer earns curiosity. Walking into a pitch meeting and leading with “we’re building an AI agent” isn’t a differentiator in 2026.
It’s really never that easy to fundraise, even though it seems like it sometimes.
~Steve Lord
Steve describes today’s environment as an “X-plus” stage for founders. It’s no longer enough to have a compelling idea or a clever application of new technology. Founders have to clearly articulate why their team is uniquely positioned to win, why the approach is defensible, and why the opportunity exists right now. Compared to a year ago, the “why me” message has to be tighter, cleaner, and more explicit.
Execution is Now Constrained by Talent
Another constraint founders need to account for in 2026 is engineering talent.
Steve notes that even well-funded AI startups are running into a practical ceiling. Not because the idea isn’t strong or investors aren’t supportive, but because hiring qualified engineers at a sustainable cost has become increasingly difficult.
In some cases, startups have the money, the market, and the momentum, but simply can’t build fast enough. That bottleneck affects product timelines, customer delivery, and ultimately investor confidence. At some point, every startup can only move as quickly as its engineering and product teams allow.
Talent strategy needs to be part of the fundraising strategy. Investors are paying closer attention to how teams plan to hire, retain, and scale engineering capacity—not just whether the idea is compelling. Focusing on this early, rather than reacting after a round closes, can prevent execution risk from becoming the next growth limiter.
M&A, Consolidation, and Why Exits May Look Different
Steve expects M&A activity to become a more important force in the startup ecosystem in 2026. With IPO markets still slow to reopen, acquisitions remain one of the most reliable ways investors generate returns and liquidity. Those realized returns allow capital to flow back into venture funds and, eventually, into new and existing startups.
For founders, this shift also changes how exits may unfold. M&A is increasingly the path through which value is realized, especially in fast-moving sectors like AI. Consolidation tends to accelerate as larger players look to acquire products, teams, or capabilities rather than build everything internally. That dynamic can create meaningful opportunities for startups that have gained traction, even if an exit wasn’t part of the near-term plan.
Why Clean Books, Taxes, and Cap Tables Matter More Than Ever
If consolidation accelerates, speed becomes critical. Steve’s advice is blunt: founders should always be ready for a transaction conversation.
That means timely financial closes, accurate cap tables, and clean tax compliance. Sales tax issues, franchise taxes, or messy equity records can stall diligence or kill deals entirely. Fixing those problems under pressure is costly and slow.
If your books haven’t been closed in a couple months, as a founder you need to get on that.
~Steve Lord
In a market where opportunities may come unexpectedly, operational readiness gives founders leverage. It allows them to move quickly, negotiate confidently, and avoid losing momentum when it matters most.
Looking Ahead
Thanks to Steve Lord for sharing his perspective and setting clear expectations for what founders should be watching as 2026 unfolds. With cautious optimism, a sharper focus on fundamentals, and a readiness to act, founders may find the year ahead offers more opportunity than the last.
Here’s to a strong start, and an even stronger year ahead!
Intro 00:01
Announcer, welcome to Startup Success, the podcast for startup founders and investors. Here you’ll find stories of success from others in the trenches as they work to scale some of the fastest growing startups in the world, stories that will help you in your own journey. Startup Success starts now.
Kate 00:17
Welcome to Startup Success and happy new year. We’re kicking off 2026 with one of our favorite guests, Steve Lord, the Chief Operating Officer and Chief Knowledge Officer at Burkland, is here with us today. Hi Steve.
Steven Lord 00:34
Hi. How are you? Happy New Year.
Kate 00:37
Happy New Year. It’s great to see you. Before we get into Q1 of this upcoming year, let’s just debrief and talk a bit about 2025 and everything that went down.
Steven Lord 00:51
For what we do and for folks that are on, you know, this podcast, and what the kinds of folks that we have listening to us are tend to be interested in, I think 2025 is two stories. It’s what happened, but it’s also what didn’t happen. And there’s a lot there actually. We, you and I talked a lot about it, but also out there in the wide world, there was a lot of expectation for faster interest rate cuts sooner. They didn’t happen for a lot of good reasons. We did have a continuation of the kind of, you know, slow simmer VC funding environment. I think a lot of us, myself included, thought that by the second half of 2025 we would have seen a little bit more velocity going there, and it just didn’t happen. And I think one of the other things that is important to note is investments are or, you know, the economic tailwind of things like the startup ecosystem, the venture community, even the public stock market, is all a predication of expectations, right? What’s going to happen? It’s rarely pricing what’s happening today. And a lot of what we saw in 2025 especially the back half, was a factor of those expectations being pushed out. And overlay on top of it, the old saying that Wall Street can handle bullish predictions and it can handle bearish predictions. But what it really can’t handle very well is uncertainty, right? And what did we have? Really since January of 2025, we have had one fever dream moment after the other, left or right, blue or red. It doesn’t matter. It has been a very volatile year in terms of forward expectations. So I’m not surprised that a lot of this stuff has pushed out. And don’t forget, we lost a lot of insight into the economy at the back half of last year in Q4. We lost the employment numbers. We lost the veracity of a lot of the tracking that the BLS and the Fed do. So mix all of that in together, and I think some of the longer, like deep-seated macro trends that we called out in 2025 are still very much in play, but they’re really going to be a 2026 event and not a 2025 event.
Kate 03:07
Wow. Okay, so we’re still like, what’s the mood, then? Are we optimistic? Cautiously optimistic?
Steven Lord 03:16
I think that’s the right description, cautiously optimistic. And this is for a number of reasons there, and there’s a couple cross currents to call out there. But I think primary among those reasons is a sense that the country was able to digest 2025 without a train wreck. And if you think about what we went through in 2025 that any one of those things we went through would have been enough to torpedo economies. The tariffs alone, right? And we’re it’s, you know, first big trading day of January, after the break, and the stock market’s hitting a record high, right, right? That alone is a pretty encouraging sign that the market, the public market, is a forward discounting mechanism. It’s trying to price what’s going to happen. So what the market is telling you is tariffs, Trump, Venezuela now, all of this stuff is kind of noise around the edges of what is and remains, despite a lot of predictions otherwise, an actually very strong economy at the bottom line. Employment, that’s the thing to note for the year ahead, and especially the first half, the employment numbers are going to be the key.
Kate 04:30
right? And those were low, so.
Steven Lord 04:33
Right? But can, we don’t really know if they were low, because the last, I think, solid data we have from the Bureau of Labor Statistics is September.
Kate 04:41
So we shouldn’t really read into Q4 labor numbers that much because of the shutdown?
Steven Lord 04:49
Right. And you know, shortly after this call, you know, later on this week, we’re going to have probably the first clean numbers coming out of there. And you know, we’re talking a swing of a couple 100,000 jobs every month. So that’s material, right? The other data point, which I think we have to be very careful about in terms of backward comparisons, is inflation. Right? You have it, it’s there. It’s not measured well in the best of times, this thing doesn’t work the last, say, six months, it’s really not been measured well at all. And that contributes a little bit to this wait and see element in 2025 because we just really weren’t seeing what we thought we would see. Now, kind of swimming underneath all of this is back again to the tariffs. There’s a big court case that’s going to happen after this call in the Supreme Court is going to look at whether those tariffs were legal. A lot of people are expecting those tariffs to be kind of declared illegal and rolled back. How they’ll logistically do that, I have no idea. But very quietly in the background, we’re rolling back a lot of the tariffs. They’re not getting headlines, they’re not getting a lot of fanfare, but it’s happening. And a lot of this is going to be one of those where the conditions were artificially created for a very uncertain moment, the markets reacted. Then those same elements, remove those things from the picture, and the economy starts to take off. The stock market takes off. Everybody’s happy, yay. No more tariffs. Of course, it was all an artificial construct, to some extent in the first place. It was really all just negotiation. However, the impact is real in, you know, first to second quarter of 2026.
Kate 06:30
Okay, and where do interest rates play in this?
Steven Lord 06:33
So I have been in the camp that interest rates were going to need to come down, because I thought that we would begin seeing quite a lot of deterioration in the market or in the macro side of the economy, which hasn’t happened, just flat out hasn’t happened. The core economy has proven through the end of last year to be more resilient than I think a lot of people, including myself, expected. That is great, but what that means is that there is not necessarily room to lower the rates. This is actually a very important, a very important comment, because people misunderstand why interest rates go down and why they can’t go down in some ways. The interest rates are able to drop when the Fed is worried about a slowing economy and they don’t have to worry about inflation picking up. If they’re worried about jobs, if they’re worried about the economy slipping and all of that, they’re going to want to lower interest rates to spool the economy back up again. However, if you’re out there with that environment and a high or worrisome inflation rate, the Fed is stuck, because if it lowers interest rates, inflation starts to rise or can, right? So through most of 2025 that was what we were facing. We were facing with what seemed to be a slowing economy under the covers, with high headline inflation. Heading into this year, first half of 2026 I expect, or I would not be surprised to see some of that underlying economic concern begin to manifest into things like higher credit card delinquency rates loans being called, a little bit more like lagging deterioration symbols versus leading. At the same time, though, you’re going to see inflation, I think, start to drop if the tariffs come off. Don’t forget, the world just got another couple 100 billion barrels of oil plopped in his lap. So I would not be surprised to see gas prices start to decline, fuel, right? So all of that, especially oil that puts a tremendously downward pressure on interest rates. Then put the political lens on it, we all know Jerome Powell is not Donald Trump’s favorite guy. We all know he wants to get him out of there. That’s also going to happen in the first half of this year. And I, I would bet a lot of money that the next Fed Chairman, if they are appointed by Donald Trump, will be an absolute dove when it comes to interest rates, which means they will cut. So long, long winded
Kate 09:14
I think you’re right. Yeah, I think you’re spot on.
Steven Lord 09:16
Probably one or two cuts by June. That’s my now, my kind of like macro prediction.
Kate 09:21
Okay, that makes a lot of sense. Startup founders, I mean, the headlines everywhere was, if you were an AI startup fundraising, and that’s what we saw too, right at Burkland, yeah.
Steven Lord 09:36
I think the final stats aren’t in yet, but I think it’s something upwards of 70% of funding last year was AI related. I mean, it really was the story, right?
Kate 09:48
And the other thing I saw is that dollars deployed was up there, but by fewer firms to less startups. So it’s like the dollars went to those big players in AI, they got big rounds by the big firms.
Steven Lord 10:05
And that effect trickles down throughout the whole ecosystem. The same thing is happening with the VC funds themselves. LPs are putting capital to work in the venture ecosystem. They haven’t gotten a lot of returns yet, so they’re already a little skeptical. Why risk putting money to this little fund that no one’s ever heard of. Let’s continue investing in the top 10 names that we all hear. So that same thing is happening inside the LP/GP side of the venture ecosystem as well. Big dollars are chasing the big names. Now, not the first time we’ve seen that movie. A lot of times, there are new sectors that come out of nowhere and all of a sudden, everybody’s throwing money at them. I think ‘26 is going to see that drop a little bit. I think you’re going to see the base starting to widen out a little bit. And the other reason why I think that will happen is, if the speed of the sector’s development is any indication, this year, maybe the back half of this year, but this year, nonetheless, we will start to see a little bit of the kind of branch consolidation that we’ve seen in other sectors when they were so popular, right? This means spin offs, off of the really big firms, big firms buying, we’ve already seen Open AI, buying all these little startups, right? You’re going to see a little bit of consolidation start to pick up in that space.
Kate 11:23
Okay, so if you’re a founder, you should then be feeling pretty optimistic about the year ahead.
Steven Lord 11:33
I think so, particularly the early stage founders. I think at the risk of sounding very repetitive from what I’ve said at the back half of or the last quarter, the last time we met. Where the real funding gap has opened up has been the seed, A, A plus, B minus, that size of venture round. The big rounds, they continue to get a lot of dollars. And the sort of like Angel two guys and a laptop, they were able to kind of get off the ground, because all they had to do was say, we have an AI idea, and Californians would be like, here’s my money, right? But it’s that we actually have a business. We’ve actually got employees, we’ve got some, maybe a little bit of revenue, and we’re trying to prove scale and fit, that has been really kind of neglected, and that’s where I think we’re going to see more activity this year.
Kate 12:28
I see. That’s good, that’s good for most of the audience listening. That’s kind of their profile. Yeah. Anything as a founder, you should have on your radar for this year?
Steven Lord 12:41
I think be cognizant of these cross currents. It’s always very important, in my opinion, that startup founders understand the world in which they’re swimming, right? So you kind of got to have your eye on the interest rate structure. You’ve got to know what the LP/GP world looks like. It is still a numbers game. Don’t think that what I’m saying is going to make it make it easy to fundraise. It’s really never that easy to fundraise, even though it seems that sometimes. Be all of the things we’ve talked about before. Be aware of the message you’re saying, make it tight, keep it clean. And be relatively speaking, be focused on the advantages your startup can bring to the fight. There are a lot of AI startups now. Going into a pitch meeting and saying, Hey, I’ve got this artificial intelligence idea. I can make an agent that can run your calendar for you. No one is going to care, right? So it has to be that we’re at that X plus stage now where the founders have to articulate their why me message now better than they maybe needed to do a year ago.
Kate 13:47
That’s so true, because it’s not unique anymore, right?
Steven Lord 13:54
Another thing I think founders should have in the back of their mind is one of the elements we’re seeing as really gating items to startup progression is the availability and the affordability of engineering talent in the AI space. So you could have a very well funded startup with all the right investors and a really good idea and a strong founding team, but they can’t hire enough qualified engineers to actually build the thing at an affordable price. That’s becoming a bit of a concern. So I think founders need to have this on their radar as well. You, at some point, will only be able to move as fast as your engineering team and your product team are able to build. So have that and it doesn’t mean it’s impossible, just index it kind of earlier, maybe in your planning.
Kate 14:42
That’s a great call out. I’ve heard that a lot lately, that hiring is really challenging in that sector and engineering. Yeah, yeah, that’s a really good call out. This has been super helpful. As always. I’m feeling better. 2025 was one of those years where each month you just didn’t know what was going to happen, but we somehow managed to get through it, and it was a decent year.
Steven Lord 15:10
I think that’s an important thing to call out too, because 2025 was so volatile in a lot of ways and uncertain, there is a, you know, in another life, you call this crisis fatigue, there is an uncertainty fatigue that can creep in, and we might be dealing with that a little bit now. Of course, it’s crazy land every day. Of course, I mean this, we got this way with the pandemic a little bit like nothing really surprised us anymore. We have a little bit of that. You know, we’re dating this podcast a little bit, but we all woke up a couple days ago and then we’d attack Venezuela right, like, right. Okay, right. The market is up 700 points today after that news. So I wonder if the world, this world, is getting a little accustomed to it. Maybe. Maybe it’s not phasing us as much that it’s a little crazy. That doesn’t mean that it can’t get worse, right? Like, I think it’s important to call that out, but for right now anyway, I think if all else being equal, we’re able to just continue this gradual creep toward a more, I don’t want to say normal, but a, perhaps a more traditional economic footprint, where things like interest rates, inflation, all of that sort of is in a box that we’ve seen before, then I think it’ll be a pretty strong environment. I do think that might take until the back half of this year. But last thing I wanted to throw out here, too, with the financings is we’ll know quickly if the tide has turned there a little bit, because there has been so much, you know, we hear about it all the time, all this dry powder on the sidelines, all of these startups. And the thing I think a lot of people should be watching is, is there M&A activity? Is there IPO activity? Because that is what is going to bring new capital and get new capital deployed out into the ecosystem, is, can these LPs actually earn a return anytime soon on their money?
Kate 17:14
That is so true. I just saw a headline today about that, like is, is M&A the new IPO, because that seems to be like that, you know, the way a lot of either,
Steven Lord 17:25
It sure seems it. And for startup founders out there, that’s fine, like, you don’t need to care about that. An exit’s an exit’s an exit.
Kate 17:34
A successful exit. Everybody wins in some way.
Steven Lord 17:38
Yeah, if I’m right about the consolidation, though, another factor for the startup founders, particularly the more mature ones that might be listening – I mean mature in terms of like their business, not them (stage) – is you have to be ready to have that conversation. So don’t wait until the term sheet comes across your email to start worrying if your books are closed and if your cap table is correct and all that, because you’re, it doesn’t mean it’s going to happen, but if that consolidation wave does show up, and you are a startup that’s got some marketplace, you might get that call, and you want to be able to have the conversations quickly. So it’s just a good, good word to the wise anyway, but especially coming into the new year, this new year, I think it’s worth mentioning that startup founders need to be ready to have a, you know, a transaction conversation, really, all the time. If your books haven’t been closed in a couple months, you as a founder, you need to get on that.
Kate 18:37
Yeah, that’s a really great call out. You know, taxes, all of it, like, be up for your diligence. Like, right? So that, yeah.
Steven Lord 18:46
Always be closing, right? You mentioned tax. That’s a great call out, because this time of year is when a lot of founders go, Oh, yeah, tax, that’s a big deal. And that will shoot your diligence process dead if you have screwed up on the taxes. Sales tax, franchise taxes in Delaware, all that stuff comes up and it takes time and money to fix.
Kate 19:08
Right. So true? Yeah, I’m really glad we mentioned that. Very true. Thank you, Steve. It’s always so helpful to talk to you. Such great episodes you always bring, so we look forward to talking to you again in Q2.
Steven Lord 19:24
Let’s hope I start getting these things happening the way I expect. I really do feel it’s just, you know, it’s like anything, you can be right, but early, and I think a lot of what we were expecting to happen in ‘25 was that so, we’ll see.
Kate 19:39
It took longer, but the year still turned out okay.
Steven Lord 19:45
And I think ‘26 could turn out to be good.
Kate 19:47
Let’s hope, fingers crossed. Let’s hope, yes, thank you again. You’re welcome. Talk too soon.
Intro 19:53
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