Crypto venture capital has grown far more selective in 2025: VCs now prioritize predictable revenue, real user activity and institutional support over narrative-driven bets. Funding for crypto startups declined sharply in Q2 2025 as investors demand proven adoption and clear monetization paths.
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VCs favor projects with real adoption and predictable revenue.
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Q2 2025 saw a 59% decline in crypto startup funding and a 15% drop in deal count.
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18 projects raised $312 million in a single week; valuations often rely on future cash flows.
Crypto venture capital: VCs are more selective in 2025—learn why funding fell in Q2 and how projects must prove adoption to attract capital. Read actionable guidance now.
Crypto venture capitalists are a “lot more careful” and not just jumping on every hot narrative, says Bullish Capital Management director Sylvia To as investors shift toward projects with real adoption and predictable revenue in 2025.
Crypto venture capitalists are dialing back their risk appetite, avoiding the hot flavor of the month and applying a more critical lens to investments, according to Bullish Capital Management director Sylvia To. Investors are increasingly requiring evidence of usage and revenue before committing capital.
“VCs are a lot more careful now. It’s not just a narrative play,” To said during a sit-down interview at Token2049 in Singapore. She noted that prior cycles allowed quick checks for new layer 1 projects without proven demand. That approach has changed as market fragmentation exposed weak adoption across many chains.
What is driving the shift in crypto venture capital behavior?
The shift is driven by weak user adoption, inflated valuations and a demand for predictable revenue models. Funds now question whether infrastructure has real traction—transaction volume and developer activity are the most scrutinized metrics.
Who has been using the new infrastructure?
“You really have to start thinking: there’s all this infrastructure being built, but who has been using it?” To said. VCs are looking for active wallets, transaction volume and third-party integrations as proof points before investing.
To observed that many projects raised funds at inflated valuations in 2025, often relying on projected future cash flows rather than demonstrated pipelines. As a result, fundraising has slowed and investor scrutiny has increased.
How much did crypto startup funding change in Q2 2025?
Crypto startup funding declined significantly in Q2 2025, with a 59% drop in funding compared to the prior quarter, alongside a 15% decline in deal count, according to Galaxy Research (plain text).
Galaxy Research’s VC report showed that crypto and blockchain startups raised $1.97 billion across 378 deals in Q2 2025. Overall venture investment into crypto amounted to $10.03 billion over the three months ending June, but the quarter-on-quarter drop signals heightened selectivity among investors.
Which trends stand out in recent VC activity?
Notable developments include large institutional allocations to Bitcoin-related strategies—Strive Funds secured $750 million in May to pursue such strategies—and concentrated raises by early-stage teams focused on monetizable infra and revenue models.
How can crypto startups attract VC in 2025?
Startups must prove adoption, demonstrate predictable revenue, and show institutional interest. Clear unit economics, strong on-chain metrics and partnerships that lead to measurable transactions are essential.
- Demonstrate active users: show daily active wallets, transaction volume and retention metrics.
- Show revenue pathways: detail current or near-term revenue streams with conservative forecasts.
- Prove product-market fit: list integrations, pilot customers or institutional commitments.
- Maintain transparent governance: clear token economics and on-chain controls reduce perceived risk.
Frequently Asked Questions
Why are VCs avoiding narrative-driven crypto projects?
VCs avoid narrative-driven projects because past cycles produced many layer 1s and infra plays without user adoption. Investors now require on-chain evidence and predictable revenue to justify valuations.
How steep was the funding decline in Q2 2025?
Funding declined by 59% to $1.97 billion across 378 deals in Q2 2025, with an overall $10.03 billion invested over the three months ending June, indicating a pullback from earlier, more aggressive deployment.
What metrics do investors prioritize today?
Investors prioritize transaction volume, active users, revenue run rate, institutional partnerships and sustainable token economics when evaluating opportunities.
Key Takeaways
- Selective capital: VCs now prioritize adoption and revenue over narratives.
- Funding down: Q2 2025 saw a 59% decline in funding and fewer deals.
- Action for founders: Focus on measurable usage, conservative financials and institutional traction to attract VC interest.
Conclusion
Crypto venture capital in 2025 has moved from narrative-driven bets to disciplined underwriting centered on adoption and revenue. Projects that can demonstrate clear user activity and monetization are best positioned to secure funding. For startups, the imperative is simple: prove your metrics and tighten your revenue model to align with investor expectations.
Author: COINOTAG — Published 2025-10-04. Sources referenced as plain text: Token2049, Messari, Galaxy Research, Strive Funds, statements from Sylvia To and Eva Oberholzer (plain text).
