DC quarterly venture funding doubles to $1.4B, but fewer startups are reporting cash

Venture capital funding for tech companies in the region surged past $1 billion in the year’s third quarter, but the number of startups securing investments remains flat.

Companies in the DC region raised $1.4 billion across 88 deals in the previous three months. Investment numbers can fluctuate, but that’s more than double the cash reported in the previous quarter across a similar number of deals, according to the latest Venture Monitor report from PitchBook and the National Venture Capital Association. The top 10 companies captured nearly 80% of that total, signaling a high concentration of capital among just a handful of firms.

Contrary to a refrain commonly heard in some startup circles, that concentration isn’t necessarily negative, according to Tommy White, director of American University’s entrepreneurial program and an angel investor.

“That means the pipeline’s working,” White told Technical.ly. “You’re starting small, medium, big — and then eventually you’re going to have some big exits.”

Funding concentration is an ongoing trend both locally and nationally. Average deal sizes in the DC region have nearly tripled since 2016, per PitchBook data. Nationwide, Series D rounds are projected to have a $200 million median value this year, up from $120 million in 2025. 

Similar patterns played out in other markets, like Pittsburgh, where three deals accounted for 80% of the third quarter capital across 22 rounds. Conversely, Philly has held its average deal value steady for the last few years, with more of them being made; its deal count averages 40% higher than DC. 

Capital flows to AI, energy and defense  

AI companies are still raking in most of the country’s investment, accounting for roughly 80% of all US venture capital so far in 2026 — the highest annual share recorded by PitchBook.

National quarterly data shows a slight shift, however. AI’s share of deal value fell to 66% in the third quarter, down 22 percentage points from Q1. That drop indicates a slight pullback, leaving founders with more to prove to investors.

“Founders have to make sure they’re telling a story that makes sense and that people can understand,” said White, the angel investor and director at American University. 

Despite geopolitical conflicts, a $40 trillion national debt and rising interest rates, venture capital is flowing in the DMV region. But these factors weigh on future venture activity, particularly for later-stage companies that rely more heavily on borrowed capital, according to Josh Weed, general partner at defense tech firm Veteran Ventures Capital.  

The region’s top two raises went to energy startups, driven by the massive power demands of data centers — the world’s deepest concentration of which is in Northern Virginia. Nuclear startup Blue Energy led with a $380 million round, though that same deal was initially logged in Q2. (These kinds of timing adjustments are common in PitchBook data, according to PR specialist Amy Warmenhoven.) Biotech firms in the Maryland suburbs also reported large rounds. 

Companies building products related to national security, including cybersecurity and defense tech, brought in hundreds of millions and are a large influence on the startup ecosystem, in part thanks to the Pentagon’s proximity.

Historically large federal budgets and non-dilutive funding from the Department of War contributed heavily to that momentum, Weed said, but outcomes of the midterm elections could alter the flow. A divided government would likely change the dynamic of how budgets are passed in Congress.

“When you have everything in one party’s hand, they get to push through what they want to push through,” Weed said. “Now it will be more of a negotiation.”

Money isn’t always the answer  

Massive funding rounds can distort market reality and create unexpected hurdles for early-stage founders who haven’t yet proven product-market fit, said Richard Chilton, managing partner at cyber-focused firm BlueWing Ventures.

An influx of capital too early creates pressure to continuously seek larger raises before business fundamentals support them.

“There’s this repetitive need to raise more money,” Chilton said. “Ultimately that makes these fundraisings take longer, take more effort.”

While large growth rounds can signal market strength, local investors emphasize the need to maintain a healthy pipeline of early-stage deals. PitchBook can miss smaller angel rounds, meaning early activity may be higher than recorded. But supporting seed-stage founders remains crucial to sustaining long-term growth.

“How do we continue to get that early stage group going? Because that feeds the beast,” Chilton said. “That feeds every round going forward.”