We were glad to welcome Steve Lord back to the Startup Success podcast. As Burkland’s COO and Chief Knowledge Officer, Steve has become a regular guest on the show and a trusted voice on the venture market, fundraising conditions, and the broader economic forces shaping startup decision-making.
His latest update on Q1 was clear-eyed: despite periodic signs of improvement, the venture environment still looks a lot like it has for the last several years. For founders, that means the same core playbook still applies, but the need for focus and preparation is even higher.
Q1 looked like more of the same
Steve’s headline for the quarter was simple: more of the same.
The venture market remains heavily skewed toward AI. AI deals are attracting the overwhelming share of attention and capital, while startups outside that category are competing for a much smaller pool of funding. At the same time, the venture system itself is still clogged. IPO activity remains muted, M&A has not meaningfully reopened for most of the market, and that means limited partners aren’t seeing enough liquidity flow back from existing investments.
That lack of exits matters. When LPs aren’t getting distributions, they’re less inclined to make fresh commitments to venture funds. Steve noted that the majority of new capital entering venture appears to be going to a very small number of large, established firms, leaving emerging managers and smaller funds in a particularly difficult position.
All of the new LP capital that’s going into the VC ecosystem in general is being concentrated in the top 5-10 funds.
~ Steve Lord
For founders, this creates a double filter. It’s harder for many funds to raise capital, and harder for startups outside the hottest categories to get funded. That doesn’t mean capital is unavailable. It means competition is sharper, timelines are longer, and the margin for error is smaller.
Has venture changed, or is this still a cycle?
One of the more interesting themes in the conversation was whether this is simply a down cycle or whether the baseline structure of venture has changed.
Steve’s view was nuanced. He still believes venture is fundamentally cyclical and that the core structure of the ecosystem is likely to endure. But he also acknowledged that the recovery has taken longer than many expected, and that the scale of AI investment is unlike anything the market has seen in recent years.
That concentration is distorting the headline numbers. Massive private rounds for companies like OpenAI and Anthropic are soaking up extraordinary amounts of capital. In another era, companies at that scale would likely already have gone public, returning liquidity to the market and helping unfreeze the broader venture engine. Instead, much of that value remains locked up in private markets.
The practical takeaway for founders? Don’t build your plans around a rapid return to the old market. A healthier venture cycle may come back, but today’s operating environment still demands extra rigour and discipline.
The macro environment isn’t just background noise
The other major theme was macro instability, especially the potential economic ripple effects from the war with Iran.
Steve pointed out that the broader economy and public markets have shown surprising resilience so far. But he also warned that resilience shouldn’t be confused with immunity. Markets can absorb short-term shocks relatively well when they believe those shocks are temporary. The bigger risk emerges when disruption lasts long enough to push through into inflation, GDP growth, and business costs.
Oil is the clearest example. If energy prices remain elevated, the full effect may take months to work through the economy. Consumers feel it at the gas pump quickly, but many businesses experience it later through supply chains, transportation, input costs, and margin pressure. Airlines, for example, often hedge fuel in advance, which delays the hit.
This matters for startups even if the impact isn’t immediate. Persistent inflationary pressure could make the Federal Reserve less likely to cut rates, and in a more severe scenario could even force a tighter posture than markets currently expect. That would add another layer of pressure to fundraising, spending, and risk appetite.
What founders should ignore, and what they can’t afford to miss
One of Steve’s best points was about signal versus noise.
Founders are operating in an environment with endless distractions: geopolitical turmoil, tariff headlines, rate speculation, market volatility, and nonstop commentary. Some of that may matter to your business eventually. But much of it can become a drain on attention before it becomes a real operating issue.
Steve’s advice was to stay grounded in the questions that matter most: Do you have the right team? Is your product solving a real problem? Will the market adopt it? Is someone willing to pay for it? Are there headwinds in your category that you haven’t yet fully accounted for?
Those are the questions that build durable companies. Macro awareness is important, but founders can’t let a chaotic news cycle replace operational focus.
The fundraising playbook still applies
If there was one section of the conversation that felt especially relevant for startup operators, it was Steve’s reminder that investors still expect founders to be fully prepared.
Don’t be the founder that doesn’t have their act together, because it’s too competitive right now.
~ Steve Lord
In this market, startups don’t get many second chances. Unless a company is in one of the small number of deals attracting outsized investor enthusiasm, founders should assume every conversation matters. That means having clean diligence materials, tight financials, a coherent growth story, and a clear explanation for how the business will use capital and extend runway.
Steve’s message was blunt and useful: do not give investors a reason to pass.
That includes staying realistic on terms. Founders should protect long-term value, but they also need to recognize that this remains an investor-friendly market in many sectors. A deal that is good enough may be worth taking if it gives the company the capital and time it needs to keep building.
Cautious, but not pessimistic
For all the challenges he outlined, Steve wasn’t purely bearish.
He emphasized that the economy has been more resilient than many would have expected given the shocks of the past several quarters. He also made the point that policymakers understand the stakes around oil, inflation, and rates. That creates real incentive to contain macro disruption before it becomes embedded.
The key word, though, is transient. If current disruptions fade, the economy may continue to hold up and the startup market may gradually improve. If they persist, founders should be prepared for a tougher operating backdrop later in the year.
The longer this goes in the middle east, the great potential it has to tip us over into a recession.
~ Steve Lord
The founder takeaway
Steve’s advice for founders is consistent because the environment has been consistent: protect runway, stay close to your numbers, sharpen your narrative, and be ready when fundraising windows open.
Focus on your company, focus on your business, focus on your runway, make sure you know the answers to the good questions around the business you’re trying to build, be ready to raise whenever it happens.
~ Steve Lord
Just as important, stay focused on building the company in front of you. There’s plenty of noise in the system right now. The founders who navigate this period best will be the ones who can separate headlines from fundamentals and keep moving.
Thank you to Steve for joining us again and sharing such a grounded perspective on where the venture and startup markets stand today. We’re looking forward to having you back at the end of Q2 for another update.
Intro 00:01
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 00:19
Welcome to Startup Success in today’s episode, Steve Lord is back. Steve Lord is the Chief Knowledge Officer and CEO at Burkland. He joins us every quarter to give us the breakdown of what went on during the quarter and what startup founders can expect for what’s coming ahead. Steve joins us to talk about Q1 2026, and what the future of this year holds. Welcome back, Steve.
Steven Lord 00:47
Thank you. Glad to be here.
Kate 00:49
It’s great to have you here, as always, to delve into Q1. So in your mind, how would you describe Q1 and then where we are?
Steven Lord 01:01
In a broad sense or a VC sense? Both.
Kate 01:04
VC. Startup founder. VC.
Steven Lord 01:08
VC. Sure. I think the best summation of it is kind of more of the same, unfortunately. I mean, we’ve all been kind of peering into the fog, looking for signs of a turnaround, but the bottom line environment continues to be heavy AI dominance, little exit-ability out of existing VCs. So LPs, the, you know, these are the folks that give the VCs their money in the first place. They’re not getting returns. So the whole system is still kind of very gummed up. And, you know, well over three quarters, probably closer to 80 or 85% of all new money is going to really the top 10 managers. So even younger, newer, maybe smaller, VCs are having a really hard time finding capital. So there’s this sort of like stasis that we’re in where AI continues to really be the or a version of AI continues to be the only deal that’s really getting funded. Everybody else is kind of fighting for the scraps. And all of the new LP capital that’s going into the VC ecosystem in general is being concentrated in the top five funds, top 10, Andreessen, Vibe, you know the number, the names that everybody would recognize, right? So, I know that doesn’t sound very optimistic, but it is really fascinating to me, because we’ve been at this now, in this position, probably for three years. We’ve had a whole macroeconomic shift that occurred in the backdrop of all this stuff didn’t mean a thing. Didn’t touch it. VC was always an extremely cyclical industry, and we’ve talked a lot about that in these sessions, and you do have to start wondering now, did the baseline framework of the VC ecosystem shift? Is it not realistic to expect a reversion back to kind of the major guide posts that we used to see the ecosystem running in? You know, like a good AR, a good IRR on a 10- year vintage fund used to be 15, 12 to 15. It’s 6 right now. So, I mean, think about that for a minute. If LP or family office, or whoever is looking at the world, well, gosh, they can get 4 in a treasury bond, right, right? So are they peeling off lots and lots of new allocation to go into the venture ecosystem? No, not yet. Meanwhile, you’ve got this extreme dominance in one sector, and then even within that sector, a few key players, Open AI, Anthropic, they’re raising, quote, VC, rounds of, you know, billions and billions of dollars. You know, 15 years ago they were public by now, so that skews a lot of this. Now, if they all of a sudden went public tomorrow, like say, SpaceX, who just filed a preliminary prospectus, Open AI and Anthropic. If those three went public right now today, a lot of these numbers would, on paper, look better, because a lot of that capital would flow back out. But the foundational disconnect remains. AI is getting most of the deals, and a handful of VC managers are getting most of the new money. That’s where we sit.
Kate 04:30
And so this is because it’s been now a few years our new normal, you think?
Steven Lord 04:35
That’s the question, right? Like, I am a big proponent that in this kind of thing, there’s nothing new under the sun, and eventually the cyclicality returns, because the availability of capital is a cyclical engine. It’s got lots of inputs to it, but it’s still a cyclical thing. But, you know, we’ve been in a bunch of these, and we’re still saying sort of the same thing, like. Yeah, it’s pretty tough out there for early stage businesses to raise enough capital to become successful and maintain that momentum, unless you are AI.
Kate 05:09
Right. And you also mentioned about the same VC players. What if you’re a small fund? How are you doing right now?
Steven Lord 05:18
You’re having a very hard time raising another fund. You may even be past your quote investment period in your existing fund, but you haven’t been able to return any capital to your investors yet. So you don’t really have any reason, they don’t see a reason to sign up for your next fund yet, because, actually nothing’s happened. So this whole thing, the IPOs are down, the M&A is down, unless you’re AI. So this, this whole engine, it kind of reminds me of a wheel on a bicycle that’s kind of like stuck in the mud a little bit. It’s kind of lurching its way around, but it’s not feeling like it used to. I don’t think it’s normal to answer your question. I think it I think it is still at least a reasonable expect – let me be careful how I say this – I think it is a reasonable expectation that the sort of primary foundational footprint of the of the VC ecosystem that’s been there for generations is still going to be there (good), but it’s certainly not returning as quickly as we thought it would.
Kate 06:28
Okay, so just a different pace.
Steven Lord 06:31
Yeah. Remember too AI is one of the things I will say, is the scale of the dollars going into AI that is unprecedented.
Kate 06:41
It’s remarkable.
Steven Lord 06:42
Even crypto is, if you look at it on a chart, the “crazy town” stuff that we were dealing with back when the crypto was first getting popular, is a blip on the chart compared to AI. So maybe that is enough to lurch it into a new normal. I don’t know. My bubble radar has been up a little bit for a while now, like a lot of other people with AI can end up deflating the cyclicality too. Just to call it out, cyclical industries are cyclical because eventually the deals, the valuations, the companies, the stock prices, reprice. That’s right. Eventually you can’t get another person to buy that share of Palantir at the price you want them to buy it at, and so by default, it will start to drop. That. I just can’t believe that that’s not true anymore.
Kate 07:38
Yes, yeah, I would agree with you. (We’ll see.) We’ll see, yeah, what about the macro environment, like the war, things like that. Is that playing a part? I mean, I noticed Crunchbase had something like January and February. There was some, you know, investment activity, and then March it dropped off. And so is that these macro forces coming into play?
Steven Lord 08:09
For sure. We’ve had a couple of these right, where we start seeing the green shoots of things beginning to unlock, and capital beginning to flow. And then we sort of like, collectively yank defeat from the jaws of victory, and it reverts for some exogenous impact. You know, it was the tariffs, or it was the decision to attack Iran and all of the macroeconomic destabilization that that engenders. We’ve had a few of these and if anything, I would say, I’ve been very impressed with the resilience of the economy up to now, and the stock market and all that in the face of these things. I think partly because we’ve become a little desensitized to the craziness of it all, and we all just expect to wake up tomorrow and see some new crazy thing in our news feeds, right? So what that translates to is the market’s unwillingness to price the permanence of the dislocation, like think of oil, right? Oil’s up 60% a barrel in the last 12 months, right? Most of it in the last three – most of that in the last six weeks. But the market is not the economy is not pricing that as if it was going to be permanent. So what you’re seeing is everybody’s expecting that to be a blip and it’ll be gone tomorrow. And honestly, I think that’s what the administration is counting on, is that it won’t actually be a long term thing. However, there’s always a however. Oil is one of these foundational commodities in the economy. We won’t really see the inflationary impact of oil, the economic headwind that it creates, oil is in everything right? Oil is just about in everything we do. We won’t really see what that does to the GDP and the leading indicators, and producer pricing and producer production indexes and all that stuff for 12 months. (Oh, that long, okay.) Sure because there’s a supply chain there. (Got it.) You see it in the pump quickly. And that impact you can start to see, put the rest of it…
Kate 10:14
Ah, good point.
Steven Lord 10:17
Look at an airline. An airline has usually hedged their fuel six to eight months in advance.
Kate 10:22
So it will hit them later.
Steven Lord 10:23
When they have to replace their hedge. When they have to buy the fuel they’re going to be using in August. That’s when you see it. Okay, good, potentially, right? Okay, what I think is important for everybody on the call to think about is, if you’re a founder and you’re trying to get your idea off the ground, Steve Jobs had a famous approach to all of this stuff. Founders right now have to continue being smart about separating, you know, signal from noise. There’s a whole bunch of this stuff swirling around in their orbit that is actually not that material to their startup right now today. (Got it.) And then there’s a bunch of it that might be, right? So they just everybody like continue to be choosy and selective and intelligent around what you let take your attention away from the company you’re trying to build, because it’s super easy right now, with all of this thrash going on, to lose sight of what’s really important for your startup. Do you have the right people? Is your product gonna face headwinds that you haven’t anticipated? Will it get acceptance in the market? Is someone not related to you willing to pay you money for the thing you’re building at some point, right? Stuff like that is really where a founder needs to sit. This other stuff, it’s while important, I just feel like it has the potential to continue being massively distracting.
Kate 11:48
Yes, very distracting. And last time you were here, you spoke a lot about, you know, if you’re a founder, pay attention to your runway. You could always look at like, you know, a bridge loan and things like that, right? But if you are thinking about a fundraise, like, double down on your diligence and your story and all of that.
Steven Lord 12:11
Be ready. Like, don’t be the founder that doesn’t have their act together, because it’s too competitive right now, unless you are one of these select few deals that are in the right place at the right time with the right people and are having money thrown at you. But that’s like, you know, everybody’s going to grow up and play in the major leagues in baseball, that’s very few of the deals right now are in that position. So don’t give a VC any reason to throw you out. You know, have your act together, have your numbers, have your financial story intact and have the trajectory that you want to build your company to follow visible in those financials, right? Got it always be raising, always, always, always.
Kate 12:52
Okay, so that all still stands, which is helpful, and then don’t get distracted by a lot of this macro pressure that really isn’t impacting you, but (not yet) but be aware that you know the actual fundraising is still down, different and so hard, difficult. Be cognitive of that, but you said something that I thought was hopeful. Overall, you feel like the economy’s been resilient with all of this. (Very. Clearly.) Okay, so that’s a positive. And would you say it’s in a decent place the economy, considering everything?
Steven Lord 13:35
For right now, yes, but it is a bit on eggshells. The longer this goes in the Middle East, and I think this is very much on the minds of everybody who’s involved in some of these decisions. The longer it goes, the greater the potential it has to tip us over into a recession. So I’m just going to say that out right now. Right now, I think it’s still very avoidable, if we can get this kind of get beyond it soon, but we start getting into the late spring, early summer, and we’re still at $100 a barrel for oil, that’s going to be a real problem. So, and I don’t think we will be, I think for all of the other stuff, and we’ll leave it there. The current administration is very economically savvy. They understand money, interest rates, oil. They know what these things do to money. So if there’s exactly I have a feeling, not to minimize it or downplay the very human cost that’s going on, I have a feeling their playbook very much is banking on this being a transient impact. And markets can usually digest transient impacts pretty well. It’s the stickier ones that become a problem.
Kate 14:54
Okay, very helpful. Thank you.
Steven Lord 14:57
Can I touch on interest rates?
Kate 14:58
Yes, yes. Talk about interest rates.
Steven Lord 15:00
The other wild card in this is back to the longer this goes, the frankly, unfortunately, the longer oil is high, and the downstream effects of that become more likely in the broader economy. Actually, the more likely it is that the Fed doesn’t cut, but they actually hike. (Oh, really?) Right, because, well, sure their mandate is employment and inflation. Oil is in everything. So if oil has doubled eight to 12 months from now, inflation is going to be very much more a problem than it is today. So the fed by its charter needs to kind of be ahead of that a little bit, and they might be stuck in this extremely difficult position of kind of a sluggish economy, but inflation trending up. And the only answer they have to that is to hike. I don’t think it’s a likely outcome at the moment, but it is one that is certainly a lot more likely than it was before we had kicked over the dust in the Middle East.
Kate 16:00
Okay, but knowing, just to keep a little hopefulness, knowing that this administration cares a lot about economics, and they know that as well, so that’s like another reason for them to wrap this up.
Steven Lord 16:14
For sure. And nobody probably, intuitively, (16:17) no president in recent memory intuitively understands interest rates for better or for worse than Trump. He’s built his whole career understanding the impact of interest rates on his businesses. That’s why he’s always chirping at the Fed to cut, because he wants low rates. Because he knows that everything is easier with lower rates, everything is harder from a business perspective, with higher rates.(16:37)
Kate 16:41
We all do. We all want lower rates right now.
Steven Lord 16:45
That’s what gooses everything. But the Fed is not going to do that if oil is over $100 a barrel. Okay, so anyway, I do think it’s given all of the thrash and everything that’s going on. I’m not surprised the VC ecosystem is still kind of business the same, right? It’s not really changed. I am hopeful that this whole dislocation or destabilization is somewhat transient and we can kind of get back to business. And I feel like that’s the underscored sort of like, double down on that statement for the founders. Focus on your company, focus on your business, focus on your runway. Make sure you know the answers to the good questions around the business you’re trying to build. Be ready to raise whenever that happens. I’m going to channel something I was saying to a founder earlier. Don’t fall into the trap of being so impressed with your product that you’re refusing to take an investor’s deal that is okay, right? Okay might be okay, right now. It is definitely, unless you’re AI, it is still a bit of an investor’s market, not a founder’s market, so just be cognizant of where you are, but stick to your knitting. Don’t get caught. That signal versus noise thing, I think is right now, very important.
Kate 17:54
Steve, great advice. Really excellent advice, as always. And you actually gave me a little sense of hope and optimism too. I don’t, yeah, so which is good. I’m leaving this episode, yeah, so that’s good. So you’ll be back at the end of Q2 and we’ll talk about all of this.
Steven Lord 18:15
One of these days. I’m going to come to these and we’re going to be ragingly bullish. We’re gonna have party hats. It’s gonna be awesome.
Kate 18:20
I can’t wait. I look forward to that. Thank you again, Steve.
Steven Lord 18:22
you bet
Outro 18:24
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