The Next Capital Stack: Corporate Balance Sheets

Venture capital has funded the startup economy for the past forty years.

The next generation of ventures will likely be funded very differently.

A new capital stack is beginning to form around corporate balance sheets.

Venture capital funded the last generation of startups.
Corporate balance sheets may fund the next one.

Three forces are driving this shift.

In the last two CIO in BETA posts I wrote about what I believe is the repricing phase moving through markets.

In February 2026 Recap: The Repricing Phase, I outlined how public markets began resetting expectations around growth and capital allocation.

Then in The Next Repricing: Credit Markets, I explored how credit markets typically adjust after equity markets and why those pressures are beginning to appear across venture financing and private credit.

Public equities moved first.

Venture valuations followed as growth expectations reset.

Credit markets tend to move more slowly, yet they eventually respond as well. That adjustment is beginning to unfold now.

While investors focus on repricing cycles, a deeper structural shift is happening underneath the surface of the innovation economy.

The identity of the capital allocator itself is evolving.

For decades the venture ecosystem followed a familiar pattern.

Founders raised angel capital.

Then seed funding.

Then Series A.

Then growth capital.

Eventually companies exited through acquisition or public markets.

Venture capital sat at the center of this system, absorbing early technological risk and financing the growth of new companies.

That model worked extremely well when software startups could reach scale with relatively modest capital.

The nature of innovation is changing.

Artificial intelligence, robotics, data infrastructure, and programmable financial networks are reshaping how companies are built and how capital flows into them.

Venture capital is no longer the only engine of early innovation.

Corporations control dramatically more capital than venture funds.

Global venture capital investment in a typical year measures in the hundreds of billions of dollars.

Corporate balance sheets globally represent tens of trillions.

What I increasingly see in conversations with large organizations is not simply corporations investing in startups.

The shift is deeper.

It is a change in how innovation itself is funded.

For decades most corporate innovation programs lived inside operating budgets.

Innovation labs.
Internal product teams.
Consulting projects.
Pilot programs.

These initiatives sit inside operating expenses, which means they are exposed to annual budgeting cycles and cost pressure.

A different model is beginning to emerge.

Some organizations are allocating capital directly from the balance sheet to create new ventures rather than treating innovation as an operating expense.

Most corporate venture activity already works this way. Roughly seventy four percent of corporate investors deploy capital directly from the parent company balance sheet rather than through external venture funds, according to Global Corporate Venturing research.

Innovation is moving from the income statement to the balance sheet.

From my perspective working with large organizations through Highline Beta, this shift changes the conversation entirely.

Innovation funded through operating budgets behaves like a project.

Innovation funded from the balance sheet behaves like an investment.

The incentives change.
The timelines change.
The ambition of what gets built changes.

Experiments start to become companies.

Another important development in the innovation ecosystem is the growth of venture creation models.

Instead of simply investing in startups, corporations are partnering with venture studios to build companies around strategic opportunities from the start.

This is something I have seen firsthand.

In 2016 Ben Yoskovitz and I co-founded Highline Beta as a corporate venture studio and later closed an institutional backed venture fund. Over the past decade we have partnered with large organizations to build ventures from the inside out and have watched the capital stack evolve in real time.

When Highline Beta launched, the Financial Post described this model as a new form of co-creation between corporations, founders, and venture investors.

Companies created in this way start with structural advantages that traditional startups rarely have.

Distribution channels
Early enterprise customers
Industry expertise
Shared operating infrastructure
Capital from corporate balance sheets

Venture capital becomes one layer of risk capital inside a broader industrial capital stack.

The financing of new ventures is becoming increasingly layered.

Corporate balance sheets may fund venture creation.

Private credit markets finance infrastructure and revenue generating assets.

Revenue based financing supports growing software businesses.

Venture capital still plays an important role, although it increasingly operates alongside other sources of capital. Some companies are raising capital at valuations that stretch traditional venture capital assumptions long before durable economics or defensible moats have emerged.

Artificial intelligence illustrates the shift clearly. The cost of launching AI native startups has fallen dramatically, allowing small teams to build powerful products with open models and AI tooling.

At the same time, capital is concentrating around the infrastructure layer. A recent Crunchbase report highlighted by TechCrunch showed that OpenAI, Anthropic, and Waymo dominated nearly $18.9 billion in venture investment in February alone.

The innovation economy is producing more startups than ever while the largest capital requirements are shifting toward infrastructure controlled by large technology companies.

Many AI labs also receive discounted compute through strategic partnerships with cloud providers. These arrangements begin to resemble circular financing where infrastructure and capital come from the same corporate balance sheet. Even with those advantages, several leading AI labs continue to operate at significant losses while scaling infrastructure and research.

Corporate balance sheets once again become central to financing the frontier of innovation.

The next evolution may not simply involve new investors entering the system.

Entirely new financial infrastructure is emerging.

Programmable finance networks such as Ethereum introduce the possibility that capital itself becomes software.

Andreessen Horowitz describes this concept as programmable ownership. Tokens on blockchains such as Ethereum are not simply digital money. They are programmable records capable of embedding economic rights directly into assets.

Ownership rights, governance voting, revenue participation, and automated payouts can all be encoded directly into a token. Smart contracts execute these rules automatically without traditional intermediaries. Capital itself becomes programmable.

When that happens, the capital stack stops being a legal structure and starts behaving like software infrastructure.

This is one of the themes we have been exploring through Highline Beta’s research on the Future of Finance and our Ethereum and AI venture studio initiatives.

Instead of raising capital through discrete venture rounds, ventures may increasingly issue programmable capital structures that combine equity, governance, and revenue participation.

Finance itself begins to look like software infrastructure.

The venture capital model is not disappearing.

It is being absorbed into a broader capital allocation system.

Corporate balance sheets will fund more venture creation.

Venture studios will build companies alongside industry partners.

Private credit markets will finance infrastructure and revenue generating assets.

Programmable financial networks will reshape how capital moves through the system.

What emerges is a new venture architecture where corporate balance sheets fund company creation, venture studios build the ventures, and programmable financial infrastructure governs how capital flows.

Venture capital built the last generation of startups.

The next generation of ventures will likely be built on corporate balance sheets and programmable financial infrastructure.

Marcus Daniels

—

CIO in BETA explores the Future of Finance at the intersection of AI, Ethereum, and venture creation. Subscribe if you want to understand how the next generation of financial infrastructure is being built.