The State of Crypto VC
Some insights for founders into the current state of crypto fundraising and some of my personal prediction on the future of crypto venture capital
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Some insights for founders into the current state of crypto fundraising and some of my personal prediction on the future of crypto venture capital
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Setting the stage: It's tough out there
Fundraising is challenging because of upstream DPI and LP capital challenges.
Across the broader venture landscape funds are returning less dollars to LPs on the same timeframe of previous vintages. This in turn results in less dry capital to existing and new VCs which results in a tougher fundraising environment for founders.
Fundraising is challenging because of upstream DPI and LP capital challenges.
Across the broader venture landscape funds are returning less dollars to LPs on the same timeframe of previous vintages. This in turn results in less dry capital to existing and new VCs which results in a tougher fundraising environment for founders.
What does this mean for crypto venture?
2025 slows on deals, but matches 2024 capital deployment pace
- Slower deal count potentially related to many VCs coming towards end of funds with less dry powder to deploy
- Still some large deals getting done by larger funds hence capital deployment being on pace to prev two years
2025 slows on deals, but matches 2024 capital deployment pace
- Slower deal count potentially related to many VCs coming towards end of funds with less dry powder to deploy
- Still some large deals getting done by larger funds hence capital deployment being on pace to prev two years
Crypto M&A continues to improve over the past two years which bodes well for liquidity and exit opportunities.
Large recent M&A including NinjaTrader, Privy, Bridge, Deribit, HiddenRoaad, among others bodes well for consolidation and underwriting more crypto equity venture exits.
Large recent M&A including NinjaTrader, Privy, Bridge, Deribit, HiddenRoaad, among others bodes well for consolidation and underwriting more crypto equity venture exits.
Deal count has been relatively consistent throughout the past year, with some larger, later stage deals getting done (announced) in Q4'24 and Q1'25.
This is largely as a result of more deals being very early pre-seed, seed, accelerators where there's always more capital.
This is largely as a result of more deals being very early pre-seed, seed, accelerators where there's always more capital.
Accelerators and launchpads lead deal count by stage
Since 2024, the market has seen a large number of accelerators and launchpads, potentially reflective of tougher capital environment and founders opting to launch tokens earlier.
Since 2024, the market has seen a large number of accelerators and launchpads, potentially reflective of tougher capital environment and founders opting to launch tokens earlier.
Median Early Stage Deal Sizes Are Back on the Rise
Pre-seed has continued to increase YoY showing the availability of capital in the market at the earliest stages.
Seed, Series A, and Series B median round sizes are close or back to 2022 levels.
Pre-seed has continued to increase YoY showing the availability of capital in the market at the earliest stages.
Seed, Series A, and Series B median round sizes are close or back to 2022 levels.
State of Crypto VC Prediction #1: Tokens as Primary Investment Mechanisms
A move away from dual structured tokens and equity towards a unified structure of one asset accruing value.
One asset, one value accrual story.
A move away from dual structured tokens and equity towards a unified structure of one asset accruing value.
One asset, one value accrual story.
https://x.com/MorphoLabs/status/1930973177691189423
State of Crypto VC Prediction #2: The Convergence of Fintech & Crypto VCs
Every Fintech investor is becoming a crypto investor as they look to invest in the next generation of payments networks, neobanks, and tokenization platforms, all built on crypto rails.
The competition is coming for crypto VCs and many crypto VCs who haven't been investing in stablecoins/payments will struggle to compete with experienced fintech VCs.
Every Fintech investor is becoming a crypto investor as they look to invest in the next generation of payments networks, neobanks, and tokenization platforms, all built on crypto rails.
The competition is coming for crypto VCs and many crypto VCs who haven't been investing in stablecoins/payments will struggle to compete with experienced fintech VCs.
State of Crypto VC Prediction #3: The Rise of Liquid Venture
"Liquid venture" – Venture like opportunities in the liquid token markets
Liquidity - the liquidity of public assets/tokens means for faster liquidity
Accessibility - access is hard in private VC, liquid venture means investors don’t always have to win a deal, they can just buy the asset. OTC options are also available.
Position sizing – as companies launch tokens earlier this means small funds can still build meaningful positions and large funds can similarly deploy into larger cap liquid names
Treasury deployment – many of the best performing VC funds have historical held their venture treasury in tokens such as BTC and ETH which have generated outsized returns. I personally expect this to become more normal in bear market cycles where VC funds call more capital in advance.
"Liquid venture" – Venture like opportunities in the liquid token markets
Liquidity - the liquidity of public assets/tokens means for faster liquidity
Accessibility - access is hard in private VC, liquid venture means investors don’t always have to win a deal, they can just buy the asset. OTC options are also available.
Position sizing – as companies launch tokens earlier this means small funds can still build meaningful positions and large funds can similarly deploy into larger cap liquid names
Treasury deployment – many of the best performing VC funds have historical held their venture treasury in tokens such as BTC and ETH which have generated outsized returns. I personally expect this to become more normal in bear market cycles where VC funds call more capital in advance.
Crypto will continue to be at the frontier of venture capital.
The blend of public and private capital markets is where venture is heading, with more traditional venture funds opting to play in liquid markets (post IPO holding vehicles) or secondaries as companies delay going public. Crypto is at the frontier of venture.
Crypto continues to innovate on new capital market formation. And, as more asset move onchain, more companies will look towards onchain-first capital formation.
And finally, crypto outcomes tend to be even more power-lawed than traditional venture, with top crypto assets competing to be sovereign digital money and substrate layers for the new financial economy. The dispersion will be larger, but crypto's hyper-power laws and volatility will continue to drive capital into crypto venture in search of asymmetric returns.
The blend of public and private capital markets is where venture is heading, with more traditional venture funds opting to play in liquid markets (post IPO holding vehicles) or secondaries as companies delay going public. Crypto is at the frontier of venture.
Crypto continues to innovate on new capital market formation. And, as more asset move onchain, more companies will look towards onchain-first capital formation.
And finally, crypto outcomes tend to be even more power-lawed than traditional venture, with top crypto assets competing to be sovereign digital money and substrate layers for the new financial economy. The dispersion will be larger, but crypto's hyper-power laws and volatility will continue to drive capital into crypto venture in search of asymmetric returns.
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