Crypto Assets Venture Capital: From Frenzy to Rationality

Once upon a time, every financing news of a Crypto Asset would excite people immensely. Seed round financing became major news, and stories of anonymous teams raising huge amounts for innovative protocols were endless. However, the situation today is very different.

Recently, the news that a certain payment infrastructure company completed a $36 million Series A financing has been categorized merely as "enterprise blockchain solutions," which no longer attracts much attention. This change reflects the maturation process of the Crypto Assets industry.

Since 2020, the later-stage transactions of Crypto Assets venture capital have for the first time exceeded early-stage transactions, with a ratio of 65% to 35%. This marks a shift in the industry from the previous seed round pre-financing model to a more mature investment stage.

The current environment for Crypto Assets venture capital has undergone significant changes. Due diligence has become more stringent, regulatory compliance has become a focus, and institutional adoption has increased. Project presentations have become more professional, with KYC processes, legal teams, and sustainable revenue models becoming standard.

Taking a certain company as an example, it raised $36 million for "Unified On-Chain Payment". Another company raised $7 million for "Stablecoin-Based Payment Services". These are all enterprise-facing infrastructure projects that, although seemingly dull, possess profitability and scalability.

In the first quarter of 2025, the Crypto Assets industry completed a total of 446 transactions, with total investments reaching $4.9 billion, a 40% increase compared to the previous period. It is expected that the total financing amount for the year 2025 may reach $18 billion. However, large transactions often distort the overall data. For example, a sovereign wealth fund invested $2 billion in a trading platform, such large transactions obscure the sluggish state of the overall ecosystem.

It is worth noting that the correlation between Bitcoin prices and venture capital activity broke down in 2023. Bitcoin reached a new high, while venture capital activity remained sluggish. This may be because institutional investors can gain exposure to Crypto Assets by purchasing Bitcoin ETFs without having to fund risky startups.

Venture Capital Reality: From Frenzy to Rationality

Crypto Assets venture capital dropped 70% from its peak of $23 billion in 2022, falling to only $6 billion in 2024. The number of transactions also plummeted from 941 in the first quarter of 2022 to just 182 in the first quarter of 2025.

What is more concerning is that among the 7,650 companies that raised seed round funding since 2017, only 17% made it to Series A, and only 1% reached Series C. This data reveals the harsh reality of Crypto Assets venture capital.

Investment priorities have also undergone significant changes. Once highly sought-after gaming, NFT, and DAO projects have almost disappeared from the venture capital radar. 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 has now fallen to fourth place in capital allocation.

This reflects the shift in venture capital's focus towards businesses that can generate real revenue, rather than merely relying on narrative-driven speculative projects. Infrastructure, actual applications, and protocols that drive Crypto Assets trading and generate real fees have received funding support.

The rise of artificial intelligence has also become a major competitor to venture capital. Compared to Crypto Assets games, AI applications with clearer revenue paths are more favored.

From Seed Round to Series A: The Harsh Reality

The graduation rate of Crypto Assets from seed round to Series A is only 17%, meaning that for every six companies raising a seed round, five are unable to secure meaningful follow-up financing. In contrast, this rate in the traditional tech industry is about 25-30%.

This low graduation rate reflects a long-standing issue in the Crypto Assets industry. In the past, many projects relied solely on raising venture capital, building seemingly innovative products, launching tokens, and then letting retail investors provide exit liquidity. However, this model is no longer viable.

Most tokens issued in 2024 are trading at only a fraction of their initial valuation. There are very few projects generating over $1 million in monthly revenue. When the path to token listing is no longer smooth, the true graduation rate gradually becomes apparent.

Nowadays, venture capital is starting to focus on traditional business questions: "How do you make money?" and "When can you become profitable?" This indicates that the Crypto Assets industry is moving towards a more mature and rational direction.

Centralization Trend

Despite the overall decline in trading volume, the median size of seed rounds has significantly increased. This indicates that the industry is consolidating around fewer, larger investment projects. For founders, the difficulty of securing funding will greatly increase if they are not within the core circle.

Top funds not only select high-quality projects but also actively ensure that their portfolio companies continue to receive funding support. For example, 44% of the companies in a well-known fund's portfolio have the fund's participation in subsequent financing rounds.

Looking to the Future

The Crypto Assets industry is undergoing a transition from speculation to substance. The market is beginning to apply stricter performance standards, which poses a challenge for founders who are used to raising funds based on token potential rather than business fundamentals.

However, for companies dedicated to solving real problems and building genuine businesses, opportunities still exist. Competition for funding has decreased, investors are more focused, and success metrics are clearer.

Institutional investors that remain are no longer looking for the next "meme coin" or speculative projects, but are focusing on companies that can create real value. Founders and investors who survive this transformation will build the infrastructure for the next chapter of Crypto Assets, this time based on solid business fundamentals.