Equity Capital Markets Update – Q1 2026

Growth Capital Volume Shows Continued Momentum, Valuations Continue Strong Rebound

2026 Growth Equity Deployment on Pace for Strongest Year Since 2021

Through Q1 2026, equity capital investments in late-stage private companies reached $96 billion, surpassing all volumes of capital raised in Q1 over the last 10 years, according to PitchBook. Part of the increase in deal volume was driven by continued investment in artificial intelligence (AI) and data center–related companies. Q1 2026 recorded 13 deals exceeding $1 billion, up from eight deals in Q1 2025. Excluding scaled AI companies—OpenAI, Anthropic, and xAI—there were 10 deals over $1 billion in Q1 2026, compared with seven in Q1 2025.

Other active sectors for growth equity financing include Information Technology (IT), Manufacturing, and Environmental Services. In the twelve months ending March 31, 2026, deal activity across each sector remained resilient, with IT accounting for 1,375 transactions, Manufacturing recording 229 transactions, and Environmental Services completing 56 transactions—each generally in line with prior-year levels. Despite steady deal counts, aggregate transaction value increased meaningfully year-over-year (YOY), rising from $114 billion to $163 billion in IT, from $18 billion to $22 billion in Manufacturing, and from $2.1 billion to $3.8 billion in Environmental Services. This trend reflects improving deal quality, larger transaction sizes, and sustained investor appetite for later-stage companies.

Valuations Remain Elevated in Q1 2026, Signaling Sustained Investor Confidence and a Stable Late-Stage Funding Environment

The median pre-money valuation for North American growth equity transactions reached $314 million in Q1 2026, compared to $260 million in Q1 2025 and above the 2021 level of $250 million. This continued improvement reflects robust investor sentiment, improving Public market comparables, and continued demand for high-growth opportunities, particularly in AI-driven sectors.

Financing Structures Continue to Evolve to Meet the Financing Needs of Companies

With financing costs remaining elevated and ongoing trade policy and geopolitical uncertainty continuing to impact certain sectors, there remains a need for creative structuring between capital raisers and providers. Equity investments that have more bespoke terms—“structured equity”—can be a compelling solution for companies in a variety of situations such as companies in performance transitions or in sectors with secular headwinds. Terms can typically be constructed to bridge a valuation gap between companies and investors.

Private Equity Fundraising Activity Begins to Show Early Signs of Recovery Following Five-Year Lows

While fund count declined each year since 2022 as limited partners (LPs) concentrated commitments with established managers due to limited exits and distributions, recent data suggests improving momentum. Through Q1 2026, U.S. private equity (PE) and growth equity funds raised $54 billion across 90 vehicles, up from $47 billion across 77 vehicles during the same period last year.

Growth equity remains an important part of the U.S. PE mix. In Q1 2026, growth funds captured ~17% of capital raised, demonstrating continued LP appetite following elevated activity in 2025.

To discuss equity capital conditions moving through the remainder of 2026, provide an update on your business, or learn about Capstone’s wide range of advisory services and equity capital markets knowledge, please contact us.

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For more on middle market M&A trends, deal volumes, and valuations, access our Capital Markets Update here.