From Speculation to Pragmatism: The Evolution of Crypto Assets Venture Capital

Introduction

Looking back, I used to feel excited about every crypto assets fundraising announcement. Each round of seed funding felt like major news. I would eagerly research the founders' backgrounds, delve into their communities, and try to understand what made the projects unique.

However, to this day, when I see a new round of financing appearing in the headlines, my reaction is completely different. Series A financing, 36 million USD, stablecoin payment infrastructure - I simply categorize this information as "enterprise blockchain solutions" and then continue to deal with other matters.

Unknowingly, my attitude has become so pragmatic.

The Shift in the Crypto Venture Capital Landscape

Recent data shows that late-stage investments in Crypto Assets have for the first time surpassed early-stage investments, with a ratio of 65% to 35%. This industry, which was once dominated by pre-seed financing, is now experiencing a significant shift.

Today, the landscape of Crypto Assets venture capital presents a more mature outlook: the due diligence cycle has lengthened, regulatory compliance has become a focus, and institutional adoption rates have increased. Project pitches have become more professional, replacing the once prevalent anonymous community news. KYC processes, legal teams, and viable revenue models have become standard configurations.

Data Interpretation

In the first quarter of 2025, the crypto assets sector completed a total of 446 transactions, with a total investment amount reaching 4.9 billion USD, a quarter-on-quarter increase of 40%. It is expected that the total financing amount for the entire year of 2025 may reach 18 billion USD.

However, behind these numbers lies a reality: a small number of large transactions are distorting the overall data. For example, a certain sovereign fund invested $2 billion in a certain trading platform, and such a single transaction greatly affects the overall statistics.

It is worth noting that the correlation between Bitcoin prices and venture capital activity broke down in 2023 and has not yet recovered. This indicates that as institutional investors can gain exposure to Bitcoin directly through ETFs, their enthusiasm for investing in risky startups has diminished.

Venture Capital Reality

Crypto Assets venture capital fell by about 70% from a peak of $23 billion in 2022 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 reveals the harsh reality of Crypto Assets entrepreneurship.

Investment Focus Shift

In 2021-2022, popular sectors like games, NFTs, and DAOs have almost disappeared from the attention list of venture capital. In the first quarter of 2025, trading and infrastructure projects attracted most of the venture capital, with DeFi protocols raising $763 million. In contrast, the Web3/NFT/DAO/gaming categories, which once dominated transaction volumes, have slipped to fourth place in capital allocation.

This shift reflects that venture capital is moving its focus from narrative-driven speculation to business models that can actually generate revenue.

Graduation Rate Crisis

The graduation rate of Crypto Assets from seed rounds to Series A is only 17%, far lower than the 25-30% level of the traditional tech industry. This data highlights a fundamental problem that has long existed in the encryption industry: an over-reliance on token listings as an exit strategy, while neglecting real business growth and profitability.

As the path for token listings shrinks, venture capitalists are beginning to ask more traditional questions: "How do you make money?" and "When will you be profitable?" This marks a shift in the industry towards a more rational and sustainable direction.

Centralization Trend

Despite the overall decline in trading volume, the median size of seed rounds has increased. This indicates that the industry is consolidating around fewer, larger bets. Top funds are more involved in subsequent financing, further strengthening this trend of centralization.

Conclusion

Crypto Assets venture capital is undergoing a transformation from speculation to substance. While this process may be painful for many founders accustomed to old models, it brings opportunities for projects focused on solving real problems and creating genuine value.

In this new era, success will be built on a solid business foundation, not just on token mechanisms. While we may reminisce about the chaos and passion of the past, this shift might be exactly what the Crypto Assets industry needs for long-term healthy development.