Recently, the crypto circle has sparked a discussion about "whether crypto VC has already died."

The latest venture capital report from Galaxy Research shows that in the second quarter of 2025, cryptocurrency and blockchain startups raised a total of $1.97 billion across 378 deals. Compared with the previous quarter, the funding amount decreased by 59%, and the number of deals decreased by 15%. This is the second-lowest quarterly total since the fourth quarter of 2020.

Independent researcher Haotian pointed out: "It's been four years, and VCs haven't even found a sustainable investment model; top VCs can get the best terms, the lowest prices, and earlier exit opportunities, while most small and medium-sized VCs rely on follow-on investments for scraps, being used as exit liquidity by large institutions; most VCs are just 'larger retail investors,' basically betting on probability through portfolio diversity; the market is looking for a possibility that doesn't require VCs."

How do industry insiders view the demise of crypto VC? Is crypto VC really almost gone?

I. Crypto VC Suffers a Waterloo

A joint study by Chainplay and Strorible shows that among 1,181 crypto projects that received venture capital between January 1, 2023, and December 31, 2024, nearly 45% have ceased operations, and 77% have monthly revenues of less than $1,000.

Regarding venture capital firms, Polychain Capital has the highest investment failure rate, with 44% of participated projects terminated and 76% of projects generating no effective revenue; Yzi Labs (formerly Binance Labs) has a supported project failure rate of 72%; top VC firms like Circle, Delphi Ventures, Consensys, and Andreessen Horowitz also have a large number of supported projects that have ceased operations, with many seeing over two-thirds of projects fail.

Among angel investors, former Coinbase CTO Balaji Srinivasan has the highest proportion of "zombie projects" at 57%; Arthur Hayes at 34%, Santiago Santos at 15%, while projects supported by Sandeep Nailwal and Stani Kulechov each have 10% that have ceased operations.

Data shows a significant correlation between fundraising scale and success rate. Projects raising over $50 million have a significantly lower failure rate, while among projects raising less than $5 million, 33% have failed and 20% have ceased operations.

II. The "More Rational VC" Argument

Jademont, Founding Partner and CEO of Waterdrip Capital, pointed out: "Why are VCs almost gone? Everyone can look at the listing announcements from top CEXs over the past two years. They only tell you that 'XXX' (a few letters) is going to be listed, urging everyone to go gamble, without wasting a single extra word to introduce why this project is being listed or what it does. Many retail investors have been博弈ing with manipulators for months without knowing what the asset they are trading actually does, let alone using the product. CEXs have become severely casino-fied, and even casinos occasionally cheat.

It is said that the current top criteria for CEXs evaluating listings are community heat, whether market-making funds are sufficient, and whether they are willing to contribute enough free tokens. If the listing conditions are like this, then the existence of VCs indeed becomes less meaningful. Because most VCs don't have the ability to help projects build communities, nor are they willing to help projects manipulate the market and gamble against retail investors.

So, rather than saying VCs are almost gone, it's better to say VCs have made different choices. First, they are unwilling to promote anymore. Because promotion has little practical meaning beyond PR. Moreover, if the project messes up, they get骂ed along with the project team by the community. Remember, even with responsible teams, early-stage projects have a high probability of failing. It's better to wait until the project grows before telling the market, 'I invested in this project.' Second, many projects simply have no plan to issue tokens, or don't target retail business, so promotion isn't necessary. Just celebrate when they ring the bell at their IPO. Looking at the schedule, at least 3-5 early-stage invested projects will list on Nasdaq next year. Starting a business now doesn't only have token issuance as an exit path."

Sylvia To, Director of Bullish Capital Management, stated: Cryptocurrency venture capitalists are reducing risk appetite, avoiding the hot topics of the month, and taking a more critical look at investments. "You really have to start thinking, this industry is building this infrastructure, but who is using it? Is there enough transaction volume? Is the volume generated through these blockchains enough to justify all the raised capital?"

In 2025, many projects are raising funds at excessively high and often unreasonable valuations, heavily relying on future cash flow predictions.

III. The "Shift in Capital Flow" Argument

The long-term correlation between Bitcoin price and VC has disappeared and is "difficult to restore." This disconnect stems from waning interest from venture capitalists and the market's increasing focus on Bitcoin accumulation over other investments.

Venture capital focused on cryptocurrencies is struggling to return to the 2021 highs. Source: Galaxy Research

Data from Insights4VC shows: a shift in capital flow. Digital asset finance companies (tools primarily raising funds to buy cryptocurrencies) have attracted most of the investment this year, pulling in $15 billion for accumulating Bitcoin, Ethereum, and other tokens as of August 21.

The divergence between large funds hoarding cryptocurrencies and startups seeking venture capital reflects a change in investor mindset. Bitwise CEO Hunter Horsley said that more backers are demanding clearer paths to profitability and sustainable business models. The pursuit of yield is driving Wall Street's investment in Ethereum. "If you take $1 billion of ETH, put it into a company, and then stake it, suddenly, you're profitable. Investors have gotten used to companies that are profitable."

Nick Tomaino, founder of 1confirmation, previously posted on platform X that the rise of Ethereum means "the death of crypto VC," 99% of crypto VCs will soon die out. The right place, the right time, access to institutional capital, without vision or creativity, aligning with users is the only way for long-term development.

IV. The "Market Maturation" Argument

Eva Oberholzer, Chief Investment Officer of venture firm Ajna Capital: Venture firms are becoming more selective about the crypto projects they invest in, indicating a shift from the previous cycle due to market maturation. "We have reached a different stage for crypto, similar to each cycle of other technologies we've seen in the past."

Market maturity has slowed the pace of pre-seed investment, as VCs shift their focus to mature projects with clear business models. "It's more about predictable revenue models, institutional reliance, and irreversible adoption. So, what we're seeing now is that crypto isn't driven by any Memecoin mania or other trends, but more related to institutional adoption. Currently, venture firms are focusing on stablecoin projects and investing in other forms of payment infrastructure that can generate fees."

The shift in venture activity reflects a broader trend in institutional crypto investment and a focus on revenue-generating digital asset businesses, rather than the price speculation that drove investment in previous crypto cycles like the 2021 bull market.

V. The Future of VC

Trader Tong JunJun pointed out: "In the last bull market, VCs were dream factories, telling stories, pumping valuations, and selling to the secondary market. This cycle, they found that they themselves became the ones getting割 by market makers and traffic. The so-called collapse of investment logic is actually the reclaiming of discourse power. Nowadays, VCs no longer invest in projects; some have become market makers, some have turned to incubation, and more are learning the investment bank model, surviving on liquidity and commissions."

Quantitative trader Ares pointed out: The duties of VCs in traditional industries are nothing more than providing capital + resource support, which is particularly effective in an environment where traditional industry financing is difficult and listing requirements are strict. In the crypto circle, however, the environment seems vastly different; the difficulty of financing and the requirements for listing on exchanges are completely different. Therefore, VCs must also make corresponding changes to adapt to the investment and financing environment of the crypto space. I think VCs in the crypto space will be divided into two major categories in the future: Top exchange VCs — being invested in basically means queuing for listing; VCs with huge traffic — like a16z, who understand the玩法 of the crypto circle, are good at marketing, and can provide one-stop services for projects sparing no effort.

According to a Galaxy research report: In Q2 2025, the mining category attracted larger amounts (approximately over $300 million) — this is the first time in recent years that the mining category received the highest share. During the same period, categories like exchanges, lending, Web3, NFT, gaming, DAO, metaverse, and infrastructure still accounted for a larger number of investment projects. VC activity overall remains active and healthy, with areas like artificial intelligence, blockchain infrastructure, and trading continuing to attract deals and funding, and pre-seed financing activity also remaining stable.

Conclusion

Times have changed. The crypto VCs that drove the rhythm of the last bull market have encountered a cold spell in this cycle. VC rationalization, changes in capital flow, crypto market maturation... Regardless of which argument market participants agree with, perhaps the era of VCs making money easily is truly gone. What VCs should do is not to clarify "whether they are still alive," but to prove with practical actions that "I am living better."