As the startup world heads into 2026, founders are navigating an environment defined by unprecedented acceleration and regulatory uncertainty.
The rise of AI-powered tools has triggered a surge in experimentation and company creation, lowering the bar to entry for first-time founders and supercharging product cycles for experienced teams.
At the same time, AI regulations across Europe are taking shape or being reworked. The EU AI Act is already forcing companies to adjust their internal processes and risk assessments, while even countries with lighter-touch approaches are preparing for more oversight.
So the question is: How can startups navigate this fast-moving and increasingly complex landscape in 2026? We got into that in our latest edition of Sifted Talks.
Our panel of industry experts was:
- Emma Burrows, cofounder & CTO at AI agent startup Portia AI
- Jannat Rajan, growth partner at Forestay Capital
- Jill Henriques, GRC subject matter expert at compliance and trust management Vanta
- Dmitry Panenkov, founder at cloud management platform Emma
1/ AI is helping bring products to market faster — but key principles still apply
Tools like AI vibe coding platform Lovable have made it easier than ever for budding entrepreneurs to build prototypes and take products to market.
“This vibe coding, low-code era means prototypes are being created faster than ever, and you have this proof-of-concept very early on. I don’t envy my seed-stage and early-stage colleagues,” says Rajan.
In the UK alone, there has been an 85% increase in the number of AI companies incorporated since 2022, reaching close to 6,000 in total.
Burrows says companies typically need to build in the same way as they did before: “You find a user pain-point, you double-down on it, and that’s still overall the best way to build a business,” she says.
“But you can do it so much faster so you should try and get to that point of validation much, much quicker, and not build in the dark because the market will move on” she adds. “It’s a fun time to build but very chaotic.”
“You think about what AI has unleashed. There has never been a faster development cycle in the history of technology [...] Legacy solutions face competitors that are being built in less than no time.” — Jannat Rajan, Forestay Capital
2/ The pace of change is bringing greater regulatory scrutiny
As technologies like vibe coding and AI agents become more ubiquitous, lawmakers around the world are moving fast to keep up with the pace of change.
From the EU’s AI Act, the world’s first comprehensive set of laws governing the technology, to the UK’s more ad hoc approach, companies operating in the space are expecting to face greater scrutiny going forward.
“Clients trust you until they don’t trust you, and it’s almost impossible to get that trust back after you’ve gone sideways,” says Henriques.
Recent political developments suggest tweaks could be made to the AI Act, despite parts of the law already being enforced, demonstrating the importance of preparing for the future by keeping tabs on legislative proposals at the earliest stages.
“It used to be that having an AI policy was a checkbox exercise but now that’s not good enough. You have to show continual compliance.” — Jill Henriques, Vanta
3/ Fears of an ‘AI bubble’ make compliance even more important
The funding frenzy around generative AI companies has shown little sign of slowing ever since OpenAI unveiled ChatGPT in late 2022.
But three years in, some onlookers predict we could be on the verge of a market realignment, in which the “AI bubble” pops and much-hyped companies with sky-high valuations could go under. Companies’ risk management and compliance efforts will likely prove vital in ensuring their long-term success.
“Every time there’s a systemic shock that affects our industry, we add to our due diligence list, rather than take away from it,” says Rajan.
“Whatever’s around the corner, hopefully it’s not painful, but if there is short-term pain, we as an industry just learn from it [...] There are new risks evolving all the time.”
“The dot com boom-and-bust was also driven by a huge technological innovation cycle. It suffered a huge crash [...] but if GPT-5 can come out, not really push things forward anymore and not cause a crash, I wonder what the crash could be precipitated by.” — Emma Burrows, Portia AI
4/ Europe’s tech sovereignty push comes with opportunities and risks
Over the past year, there has been a renewed push for European technological sovereignty, in which businesses in the region increasingly use software and hardware built by companies closer to home.
“The sovereignty topic enabled a lot of our business. We helped a lot of customers to get their infrastructure back to Europe, and get their data back to Europe, so they could be 100% sure it’s stored securely,” says Panenkov.
With landmark pieces of EU legislation such as the Digital Services Act and the Digital Markets Act testing Big Tech companies’ compliance measures, there’s growing demand for homegrown solutions.
“You can’t plan for what you don’t know is around the corner,” says Rajan. “From an investor standpoint, you just have to have conviction that the underlying market warrants the product that is being offered, and it is being offered in a compliant manner.”
“The profitable or big companies are more valuable than those that burn cash and hire people just to hire people [...] Everyone should understand the balance between your costs and the results you can deliver.” — Dmitry Panenkov, Emma
