Businesses have been piloting and testing various AI tools over the past few years to determine what their adoption strategy will look like. Investors think the experimental period is coming to an end.

TechCrunch recently surveyed 24 business-focused VCs and most predicted businesses will increase their budgets for AI in 2026 – but not all. Most investors say that this increase in the budget will be concentrated, and that many businesses will spend more funds on fewer contracts.

Andrew Ferguson, vice president of Databricks Ventures, predicts that 2026 will be the year when businesses will begin to consolidate their investments and pick winners.

“Today, businesses are testing many tools for a single use case, and there is an explosion of startups focused on certain buying centers such as (go-to-market), where it is very difficult to differentiate even during (proof of concepts),” said Ferguson. “As businesses see real proof points from AI, they will cut some of the experimental budget, rationalize overlapping tools and deploy those savings in AI technologies that have been delivered.”

Rob Biederman, a managing partner at Asymmetric Capital Partners, agrees. He predicted that business companies will not only concentrate their individual spending, the broader business landscape will reduce the overall spending on AI to just a few of the vendors in the entire industry.

“Budgets will increase for a narrow set of AI products that clearly deliver results and will decrease dramatically for everything else,” Biederman said. “We expect a bifurcation where a small number of vendors get a disproportionate share of enterprise AI budgets while many more see revenue flat or contract.”

Targeted investments

Scott Beechuk, a partner at Norwest Venture Partners, thinks businesses will increase their spending on tools that make AI safe for businesses to use.

“Enterprises are now recognizing that the real investment is in the safeguards and management layers that make AI trustworthy,” Beechuk said. “As these capabilities mature and reduce risk, organizations will feel confident moving from pilots to increased deployments, and budgets will increase.”

Harsha Kapre, a director at Snowflake Ventures, predicts that businesses will spend on AI in three distinct areas by 2026: strengthening data foundations, post-training optimization models, and consolidating tools.

“(Chief investment officers) are actively reducing (software-as-a-service) sprawl and moving toward unified, intelligent systems that lower integration costs and deliver measurable (return on investment),” Kapre said. “AI-enabled solutions are likely to see the greatest benefit from this shift.”

The shift away from experimentation and toward concentration affects startups. What is not clear is how.

It is possible that AI startups will reach the same point of reckoning SaaS startups arrived a few years ago.

Companies operating hard-to-copy products such as vertical solutions or those built on proprietary data, are likely to grow further. Startups with products similar to those offered by large business suppliers such as AWS or Salesforce, may begin to see pilot projects and funding drain.

Investors also see this possibility. When asked how they know an AI startup has a moat, many VCs say companies with proprietary data and products that cannot be easily replicated by a tech giant or large language modeling company are the most defensible.

If investor predictions are true and businesses start concentrating their AI spending next year, 2026 could be the year business budgets increase but many AI startups don’t see a bigger slice of the pie.