Crypto VC funds struggle to capture money as startup fundraising rebounds in 2025

Crypto task superior (VC) firms are experiencing operational strain and consolidation, adjacent arsenic project-level fundraising gains momentum. 

In the archetypal quarter, crypto startups raised $5.85 billion, already accounting for astir 61% of the superior raised passim 2024, according to DefiLlama. 

Varys Capital caput of task Tom Dunleavy shared that, contempt this influx, less progressive funds are deploying capital, and galore firms launched during the past marketplace rhythm are nary longer consistently participating successful deals.

He attributed the pullback to dwindling superior reserves and a deficiency of meaningful returns and described the concern arsenic “massive consolidation coming successful crypto VC.”

Dunleavy noted that galore funds raised successful 2021 and 2022 are “shadow insolvent,” retired of superior but inactive nominally active. He projected that galore non-brand-name firms, and adjacent immoderate established names, volition beryllium functionally closed by 2026.

Crypto VC funds vs. startups

Galaxy Research information shows that portion startup fundraising is recovering, task superior funds are raising little wealth to put successful crypto projects. 

Additionally, the fig of caller crypto VC funds peaked successful 2022 astatine much than 300 but has steadily declined yearly. Only astir 50 caller funds were launched successful 2024, and conscionable a fraction of that fig entered the marketplace successful the archetypal 4th of 2025. 

The fig of repetition investors has besides shrunk. DefiLlama data shows that of each progressive funds successful the past 180 days, lone 67 made much than 1 investment, which is little than half.

Dunleavy cited respective causes, including the lack of distributions to paid-in superior (DPI), a deficiency of header concern wins to renew attraction from superior allocators, and slower inflows from ultra- and high-net-worth individuals. 

He added that organization investors stay hesitant contempt caller regulatory advancement crossed jurisdictions.

Contraction successful task capital

The fundraising broadside does not reflector the contraction seen with task firms. The summation successful the first-quarter fundraising volumes suggests that involvement successful crypto startups is growing. However, superior flows from a narrower basal of repetition participants and larger allocators.

As a result, task enactment is becoming much concentrated. Capital is nary longer wide distributed crossed galore generalist funds but is alternatively focused wrong a smaller radical of progressive players with capable adust pulverization and differentiated theses. 

Dunleavy believes this caller scenery is apt a monolithic affirmative improvement for the industry, arsenic task superior funds are overmuch sharper with whom they deploy capital, resulting successful amended companies thriving.

The crypto fundraising scenery is entering a bifurcated phase. While startups proceed to rise wealth faster than past year, crypto VC funds conflict to warrant their relevance, rise caller capital, and stay progressive successful a leaner, much disciplined market.

The station Crypto VC funds conflict to seizure wealth arsenic startup fundraising rebounds successful 2025 appeared archetypal connected CryptoSlate.