2026 Wrapped - Capitaholic style

Hello Capitaholic Anonymous!
2025 is slowly coming to an end, and it’s time to start dealing with 2026 instead. Based on my recent posts covering steps 1 and 2 of a Capitaholic’s journey, it feels appropriate to write about step 3 today. Step 3 is “The Hangover” - and wouldn’t it be more fitting to write about that after New Year rather than before? I think so at least, which is why there will be no hangover today.

These days between holidays are perfect for reflecting on both the year that was and the year to come. I’ve been running a company whose entire business idea is predicting the future, so it would be rather fitting to take a forward-looking stance here and attempt to predict 2026 from a venture capital perspective. And that is exactly what today’s post is about. In a year from now, we can evaluate just how right - or wrong - my observations were.

I’ve spent the Christmas break taking it easy. When you’re on crutches, there’s only so much you can do before the laws of physics intervene. That has given me extra time to work on my novel, which is now more or less finished. My goal is to complete the first draft before the year ends.

It’s a satire about a group of first-time founders who become Capitaholics. That’s also the working title: “Capitaholics.” Once you’ve learned the five stages of a Capitaholic’s journey, you’ll be able to follow those exact steps throughout the book. That said, the last 2.5 stages are still missing - so I suppose I’ll have to write a sequel as well. Maybe something for 2026.

I’ve also found time to read a book. I picked up the sequel to my all-time favorite novel, Catch-22. It’s called Closing Time, and it’s an absolute pleasure to dive back into Heller’s satirical universe. (Yes, he’s my inspiration.)

Vanguard just projected public markets may return only 5% annually over the next decade. In a 2024 report, Goldman Sachs forecasted the S&P 500 may return just 3% annually for the same time frame—stats that put current valuations in the 7th percentile of history.

Translation? The gains we’ve seen over the past few years might not continue for quite a while.

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And they’re not just buying. They’re exiting—with net annualized returns like 17.6%, 17.8%, and 21.5% among their 23 sales.*

Wall Street won’t talk about this. But the wealthy already are. Shares in new offerings can sell quickly but…

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_{*Past performance is not indicative of future returns. Important Reg A disclosures: masterworks.com/cd.}

This week I just have to make Lovable as the Capitaholic of the week. They rasied $330M on a $6.6B valuation.

Lovable is a wrapper with some great UI. Actual programmers doesn’t use Lovable as far as I know, and those who do usually only complete their apps to 80-90%. Then what? Their ARR is at $200M which is increadible just one year in. I love the product and the idea. It’s just obvious Capitaholic manners around this financing round. 33x ARR is a high multiple to say the least.

I’m concerned about their churn. I’ve personally churned twice already and have left for other coding tools. Maybe $330M helps them find the right path to not just be the fad it looks like right now.
Are they the Clubhouse of AI or will they find real foothold before they fall? According to one of their founders, they’re aiming to be one of the biggest 5 companies in the world. That’s a Capitaholic thing to say. I love the naivety though. That’s probably their best asset. I hope they save a lot of money for their hangover.

The venture capital market follows the macro winds wherever they blow, which means everything ultimately comes down to what we believe about 2026 macro-wise.

The general sentiment around 2026 seems optimistic - which, of course, makes me pessimistic. The fly in the ointment that most people have acknowledged by now is the question of ROI on AI investments. Any real signs of weakness there will quickly deflate the U.S. stock market and ripple outward. I believe this bubble will take longer to burst than most expect. Ideally sooner rather than later - but my bet is that it happens no earlier than late 2026.

This already has implications for investment appetite, however. We’re likely looking at fairly stable interest rates in Europe and slightly declining rates in the U.S., which in sum means capital will continue to have a real cost. That naturally makes venture capital more selective.

Concerns around AI will also shift investment focus - from AI as a feature to AI as a proven cost saver. That’s something many companies still haven’t managed to demonstrate.

Pressure on VC funds is coming from LPs (Limited Partners) - the investors in the funds themselves - who want to see cash flow, i.e. exits. As a result, venture capital is moving further downstream, investing at later stages where companies have proven not just traction, but also distribution and solid unit economics. The exit needs to be within arm’s reach.

We’re late in an investment cycle, which means many angel investors are fully deployed or focused on supporting their existing portfolios. Many are also burned by now, as bankruptcies have been common over the past year.

The real needle’s eye for startups will be reaching a Series A.
The best way to survive a Series A in 2026 is…
👉 not needing one.

I believe many companies are currently in a hangover phase. Capital has dried up, and they’re just trying to limp along. That likely means continued bankruptcies - but also companies that narrowly avoid collapse yet require serious rehab (step 5) to break free from capital dependency the hard way.

There are also a lot of gold-seekers and first-time entrepreneurs out there. Being an entrepreneur is trendy - right up until you become one and realize what it actually entails. A lot of leaves will fall from the venture capital tree when the winds keep picking up in 2026.

It may be wiser to grow on a different tree altogether. Perhaps you should look for evergreen investors who are in it for the long haul. That fosters a very different kind of alignment and community. And “evergreen” fits nicely with the tree metaphor - it’s an oak, not a fast-growing energy forest.

I also believe we’ll continue to see new forms of investment emerge that don’t follow the traditional VC model. More and more people I talk to are inspired to build something of their own, for their own sake - not for an exit. They like the exist strategy more than the exit strategy, and are driven by that rather than raising capital and blitzscaling.

I see a market opportunity for investors that I believe will grow in 2026: shifting from investing in teams to investing alongside individuals. Supporting the growing wave of solopreneurs requires a different time horizon, a different investment model, and a different approach to diversification. That’s something I’ll return to in a future post.

As capital runs dry for many - and as they struggle to become capital-independent - I believe the M&A market will continue to grow in 2026. Not primarily through massive exits that flood the market with liquidity (though hopefully that happens too, as it kickstarts a new cycle), but through mergers driven by consolidation and maybe also survival. Companies joining forces to stand a better chance together than apart. M&A as an alternative to raising capital.

For entrepreneurs:
Break your capital dependency. Ironically, that’s when venture capital will actually become interested in you. That’s when you gain freedom and real optionality. If you’re capital-independent, you’ll also be far better prepared for a crash (end 2026?) than if you’ve piled on equity and debt just as the market and risk appetite suddenly collapse.

For angel investors:
Don’t run with the herd. Find people who are obsessed with customers and the business itself. Find hands-on solopreneurs and develop new models where you help them reach profitability and get paid back through dividends.

For VCs:
Invest in what truly needs investment - things that require significant capital to succeed. Not software companies that are already profitable with organic growth. Invest in deep tech, medtech, and dare to invest in impact again. Stop swimming with the current and invest in what genuinely makes a difference. Invest with purpose - this is where your portfolio strategy actually shines.

For me personally, i hope 2026 will be exciting. I hope to publish my book for example. There’s also a lot of exciting things in motion, but as is often the case with exciting things, I can’t fully reveal them just yet. In a couple of weeks, I think I’ll be able to share more.

Until then, I wish you all a truly wonderful and Happy New Year. 🎉

Capitaholic Anonymous

Till next time,

Jacob Kihlbaum