In 2025, venture financing in the crypto sector broadly met investors’ expectations in terms of capital deployed, but the market proved to be far more concentrated than anticipated. The bulk of funding was directed toward late-stage companies and a narrow group of players, while early-stage startups faced one of the most challenging fundraising environments in recent years.
According to investors, this discipline is set to persist in 2026: requirements for new investments will remain high, and token sales will play a supportive rather than a defining role in capital raising.
Crypto VC in 2025: capital is available, but concentrated
According to The Block Pro, a key driver of concentration was the rise of Digital Asset Treasury (DAT) companies — structures that allow institutional investors to gain exposure to crypto assets without directly investing in startups. Over most of 2025, such companies raised approximately $29 billion.
Traditional venture investment in crypto also held up in absolute terms, reaching $18.9 billion in 2025 compared with $13.8 billion in 2024. At the same time, deal count fell sharply: around 1,200 transactions versus more than 2,900 a year earlier (–60% year-on-year).
“I did not expect such a strong skew toward a small number of companies, especially DATs,” said Mathijs van Esch, partner at Maven 11. “I expected more early-stage investing and a smaller role for public companies and PIPE financing.”
Why early-stage funding declined
One of the main reasons for the slowdown at the seed and pre-seed stages was a shortage of available venture capital. According to Rob Hadick of Dragonfly, many crypto funds are nearing the end of their previous fund investment cycles and are struggling to raise new capital. After the 2021–2022 peak, LP interest cooled, in part because many funds underperformed bitcoin and other risk assets.
At the same time, greater regulatory clarity in a number of jurisdictions allowed companies with proven product–market fit to scale more quickly. This funneled capital into a smaller number of validated businesses and led to a “crowding” of investors around stablecoins, exchanges, prediction markets, DeFi, and infrastructure.
Anirudh Pai, partner at Robot Ventures, notes that declining risk appetite at early stages is a broader market phenomenon, not limited to crypto. He cites comments by Bill Gurley of Benchmark, who pointed to near “zero interest” from institutional investors in deals outside of AI.
Stablecoins as the main beneficiary of the cycle
According to Arianna Simpson of a16z crypto, deal concentration in 2025 was largely driven by the dominance of stablecoins, which increasingly overlap with fintech and are bringing the market back to traditional revenue models based on fees and transaction volumes rather than pure tokenomics.
An additional factor was the AI wave, which absorbed both talent and capital, reducing the number of new crypto projects.
Despite this, some investors view 2025 as a “healthy reset” after the overheated cycle of 2021 and early 2022.
What to expect in 2026
Most surveyed VCs expect a moderate recovery in early-stage activity in 2026, but without a return to the peak levels of the previous cycle.
- Investors will focus on traction and fundamentals, often sacrificing potential upside in favor of clearer exit scenarios.
- Regulatory certainty, M&A activity, and IPOs could bring new founders back into the sector.
- Discipline will remain a defining feature of the market.
Regulation may become a decisive factor. According to Hoolie Tejwani of Coinbase Ventures, further clarity in US market rules following the adoption of the GENIUS Act could have a significant impact on the startup ecosystem.
Sectors where VCs remain optimistic
The most attractive areas heading into 2026 include:
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Stablecoins and payments — driven by growing institutional demand and convergence with traditional fintech.
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Institutional market infrastructure: exchanges, trading platforms, custody, compliance, and risk tools.
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Real-world asset (RWA) tokenization, particularly as liquidity and trading infrastructure develop.
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Prediction markets and related services, although funding expectations here are more cautious.
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Next-generation DeFi, privacy solutions, and selected intersections of crypto × AI × robotics over the longer term.
At the same time, a number of funds caution that crypto-AI narratives in 2025 significantly outpaced real execution, and funding for such projects may decline in 2026.
Token sales: a complement, not a substitute for VC
Token sales and ICO-like formats returned in 2025, but investors largely agree that they have not replaced — and will not replace — venture capital.
Token sales are becoming more selective and cyclical.
The strongest projects are likely to adopt hybrid models: VC funding + token issuance.
While regulatory clarity may accelerate innovation in on-chain fundraising, venture capital is expected to remain the core source of funding for building sustainable crypto businesses.
