Crypto Assets Venture Capital: From Frenzy to Rationality

Introduction

Once upon a time, every announcement of Crypto Assets fundraising excited me immensely. No matter how small the seed round financing was, it felt like major news. I would delve into the founders’ backgrounds, join their communities, and try to understand what made the project unique.

However, by 2025, I have become much calmer about the financing news on the headlines. A stablecoin payment infrastructure project completed a $36 million Series A funding round, and I simply categorized it as “enterprise blockchain solution” and then continued to handle the work at hand.

Unknowingly, my attitude has become so pragmatic. This change is not just happening to me; the entire industry is undergoing a transformation.

The New Normal of Crypto Venture Capital

Since 2020, the late-stage investments in Crypto Assets have surpassed early-stage investments for the first time, with a ratio of 65% to 35%. This industry, which was once dominated by seed round financing, is now driven by funding from Series A and beyond.

The current crypto venture capital presents a whole new look:

• Due diligence period extended
• Focus more on regulatory compliance and institutional adoption
• Professional project promotion replaces anonymous community communication
• Complete KYC process and legal support
• Focus on real income models

Companies like Conduit have raised $36 million for “unified on-chain payments,” while Beam has secured $7 million for “stablecoin-based payment services.” These are enterprise-focused infrastructure projects aimed at building profitable and scalable businesses.

Data Interpretation

In the first quarter of 2025, the crypto industry completed a total of 446 transactions, with a total investment amount reaching $4.9 billion, a quarter-on-quarter growth of 40%. It is expected that the total financing amount for the year 2025 could reach $18 billion.

However, behind these numbers lies a fact: a few large transactions distort the overall data. For example, the Abu Dhabi sovereign fund invested $2 billion in a certain trading platform, and this single transaction accounts for a significant portion.

It is worth noting that the correlation between Bitcoin prices and venture capital activity broke in 2023 and has not yet recovered. Bitcoin has reached new highs, while venture capital activity remains sluggish. This may be because institutional investors can now gain exposure to Crypto Assets through Bitcoin ETFs and no longer need to fund risky startups.

Venture Capital Reality

The scale of risk investment in Crypto Assets has decreased by 70% from its peak of $23 billion in 2022, down to only $6 billion in 2024. The number of transactions also plummeted from 941 in the first quarter of 2022 to 182 in the first quarter of 2025.

What is even more concerning is that among the 7,650 companies that raised seed funding since 2017, only 17% made it to Series A, and only 1% reached Series C. This data reflects the maturation process of Crypto Assets venture capital, which may be a harsh reality for many entrepreneurs.

Investment Focus Shift

The gaming, NFT, DAO, and other fields that attracted significant attention from 2021 to 2022 have almost disappeared from the venture capital landscape. In the first quarter of 2025, trading and infrastructure companies attracted the majority of venture capital, while DeFi protocols raised $763 million. The Web3/NFT/DAO/gaming category, which once dominated transaction volume, has fallen to fourth place in capital allocation.

This shift indicates that venture capital is starting to place more importance on businesses that can generate actual revenue, rather than merely relying on narrative-driven speculative projects. At the same time, the field of artificial intelligence has also become a major competitor for venture capital, further exacerbating the difficulty for crypto projects to secure funding.

Graduation Crisis

The graduation rate of Crypto Assets from seed round to Series A is only 17%, far lower than the traditional technology industry’s level of 25-30%. This means that for every six companies that raise a seed round, five may never achieve meaningful follow-on financing.

The root of this phenomenon lies in the long-standing issues within the Crypto Assets industry. In the past, many projects’ strategy was to raise venture capital, build seemingly innovative products, launch tokens, and then rely on retail investors to provide exit liquidity. However, this model is no longer viable.

Most tokens issued in 2024 trade at only a small fraction of their initial valuations. There are only a handful of projects generating over $1 million in monthly revenue. Nowadays, venture capitalists are starting to ask the questions that traditional investors have long been asking: “How do you make money?” and “When will you be profitable?”

Centralization Trend

Although the overall number of financing transactions has declined, the median size of seed rounds has significantly increased since 2022. This indicates that the industry is consolidating around fewer, larger investments. The “scattergun” era of seed investing is over, and capital is concentrating towards core circles.

Data shows that top funds not only select high-quality projects but also actively ensure that their portfolio companies can continue to secure funding. For example, 44% of the companies in a well-known venture capital fund’s portfolio have the fund’s participation in subsequent rounds of financing.

Conclusion

The shift in venture capital for crypto assets from “revolutionary DeFi protocols” to “enterprise blockchain solutions” reflects the maturation process of the entire industry. Although this shift has lost some of the early purity and passion, it has also brought about a more rational and sustainable development model.

For founders accustomed to raising funds based on token potential rather than business fundamentals, the new reality may seem harsh. However, for companies dedicated to solving real problems and building genuine businesses, the current environment is actually more favorable.

As speculative funds exit, what remains is the capital truly needed by startups. Successful founders and investors will lay the groundwork for the next development stage of Crypto Assets, which this time will be built on solid business fundamentals rather than just token mechanisms.

While I miss the chaos of the past, this transformation is exactly what the Crypto Assets industry needs. The gold rush is over, and true value creation has only just begun.