In 2026, the venture capital ecosystem is undergoing a profound structural shift. While the “AI gold rush” continues to dominate headlines with massive mega-rounds, a sophisticated counter-movement led by seasoned operators is emerging to address the persistent startup funding gap. This movement isn’t just about equity—it’s about venture capital for underinvested entrepreneurs becoming a primary driver of risk-adjusted returns.
The Rise of Cherryrock Capital
A pivotal figure in this transformation is Stacy Brown-Philpot, the former CEO of TaskRabbit. Her firm, Cherryrock Capital, recently closed a $172 million debut fund with an investment thesis centered specifically on underinvested entrepreneurs.
Unlike the “spray and pray” models of the past, Cherryrock’s venture capital investment strategy focuses on high-conviction Series A and B venture capital checks. By targeting overlooked founders—particularly Black and Latine entrepreneurs who have reached product-market fit—the firm is proving that diversity is an alpha-generating strategy rather than a niche initiative.
California’s Transparency Mandate: A Regulatory Shift
The year 2026 also marks a regulatory milestone with the full implementation of the California venture capital transparency law. This mandate requires VC firms with a California nexus to report demographic data on their portfolio founding teams.
- Registration Deadline: March 1, 2026.
- Initial Reporting Deadline: April 1, 2026 (covering 2025 investments).
- Compliance Impact: For firms like Cherryrock that already prioritize inclusive venture capital, this law serves as a “report card” that validates their venture capital inclusion strategy to institutional investors like JPMorgan, Bank of America, and Goldman Sachs Asset Management.
Portfolio Spotlights: Innovation Beyond the Hype
The success of underinvested entrepreneurs is best illustrated by the companies currently scaling with the support of firms like Cherryrock and Emerson Collective.
1. Coactive AI: The Multimodal Infrastructure
Coactive AI, co-founded by Cody Coleman, is a standout in multimodal AI infrastructure. While many AI startups focus on chatbots, Coactive provides the software layer that allows enterprises to search and analyze unstructured “visual data” (images and video) without manual tagging. This media entertainment AI technology is becoming the backbone for massive retailers and social platforms.
2. Vitable Health: Healthcare for the Hourly Worker
Founded by Joseph Kitonga (a Thiel Fellow and Y Combinator alum), Vitable Health addresses the healthcare startup funding gap by providing primary care-based health insurance for hourly workers. Drawing on Kitonga’s background, the startup offers a direct primary care model that eliminates copays and deductibles, saving employers an average of 14% on total healthcare costs.
Exit Realism and the Path to Liquidity
As we navigate venture capital trends 2026, the industry is moving toward “exit realism.” With the IPO window remaining narrow for all but the largest tech giants, startup exit strategies are shifting toward strategic M&A.
“Most companies don’t go public; they get acquired. We evaluate portfolios with a focus on acquirer logic and long-term strategic fit.” — Stacy Brown-Philpot, Cherryrock Capital.
This pragmatic approach reflects a broader Silicon Valley venture trend: moving away from growth-at-all-costs and toward startup growth stage metrics that emphasize capital efficiency and product-market fit scaling.
Looking Ahead
The future of venture capital lies in its ability to source talent from the “long tail” of the market. As smaller venture capital funds continue to outperform in specialized sectors, the startup ecosystem funding challenges of the past are slowly being dismantled by a new generation of disciplined, data-driven, and diverse investors.
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This video features Joseph Kitonga, founder of Vitable Health, discussing his journey as an underinvested entrepreneur and how he built a successful, venture-backed healthcare startup.