Top crypto VCs share 2026 funding and token sales outlook

Crypto venture capital funding in 2025 largely matched investor expectations, but it ended up far more concentrated than some anticipated. While total dollars invested recovered from earlier lows, most of that money flowed into a narrow group of companies and strategies, leaving early-stage founders facing one of the toughest funding environments in years.

Much of that concentration was driven by the rise of digital asset treasury, or DAT, companies. According to The Block Pro data, DAT firms raised roughly $29 billion through most of 2025, giving institutional investors a simpler way to gain crypto exposure than backing startups directly. Traditional venture investment still held up in dollar terms, reaching about $18.9 billion in 2025, up from $13.8 billion in 2024, but that capital was spread across far fewer deals. Venture deal count fell roughly 60% year over year, dropping to about 1,200 transactions from more than 2,900 in 2024.

Why early-stage crypto funding declined in 2025

One major factor behind the pullback was simply less venture capital available to deploy. Rob Hadick, general partner at Dragonfly, told The Block that many crypto venture firms are nearing the end of their runway from prior funds and have struggled to raise new capital. Demand from limited partners has cooled since the 2021–2022 peak, he said, especially after many funds underperformed bitcoin and other risk assets. As a result, fewer dollars were available for seed and pre-seed investing.

At the same time, clearer regulation helped companies with product-market fit scale faster. That pushed capital into a smaller set of proven businesses and led to what Hadick described as investor “bunching,” particularly around stablecoins, exchanges, prediction markets, decentralized finance, and the infrastructure supporting those use cases.

Anirudh Pai, partner at Robot Ventures, told The Block that the pullback in early-stage risk extended beyond crypto. Quoting Benchmark’s Bill Gurley, Pai said institutional investors have shown “zero interest” in non-AI deals, a mindset that spilled into crypto venture capital as well.

Arianna Simpson, general partner at a16z crypto, told The Block that deal concentration in 2025 was also driven by sector dynamics. Stablecoins dominated funding as crypto increasingly overlapped with fintech, bringing a return to more traditional business models built on transaction fees and volume rather than token economics. She also said the AI boom pulled talent and attention away from crypto, contributing to fewer new deals.

Even so, some investors viewed 2025 as a healthier reset. Hadick said the 2021–early 2022 funding cycle is unlikely to repeat and that growth over the past year felt sustainable and reasoned.

Will early-stage crypto funding recover in 2026?

Most crypto investors expect early-stage funding to improve in 2026, but only modestly and well below prior-cycle levels.

Quynh Ho, head of venture investment at GSR, told The Block that early-stage activity should rebound, though the bar will remain much higher. Investors, she said, are now focused on traction and fundamentals rather than narratives, and are often willing to give up potential upside for clearer exit paths.

Hadick also expects modest but continued growth in 2026 as regulatory clarity, M&A, and IPO activity bring more founders into the space. He said the distraction created by DAT companies has largely faded, allowing venture capital to refocus on operating businesses. As stablecoin-based applications expand and blockchain usage grows, he expects more venture funds to regain momentum in fundraising.

Boris Revsin, general partner at Tribe Capital, also told The Block that 2026 should see a modest rebound in both deal count and capital deployed, though nothing close to the 2021–early 2022 peak. Discipline, he said, will remain a defining feature of the market.

Regulation could be a key swing factor. Hoolie Tejwani, head of Coinbase Ventures, told The Block that clearer market structure rules in the U.S. expected this year would be the next major unlock for startups after the recent passage of the GENIUS Act. “What happens with regulatory clarity will have a huge impact on the startup ecosystem,” he said.

Where VCs are bullish heading into 2026

Stablecoins and payments emerged as the strongest and most consistent theme across firms. Investors pointed to rising institutional adoption and clearer regulation as key drivers, with stablecoin businesses increasingly overlapping with traditional fintech. Simpson described stablecoins as the “belle of the ball” in 2025, noting a shift toward simpler revenue models based on fees and transaction volume.

Institutional-grade market infrastructure is another priority. That includes exchanges, trading platforms, custody, and risk and compliance tooling, along with crypto-native financial products that solve real operational problems. Investors said these businesses benefit directly from institutional demand.

Real-world asset tokenization also continues to attract interest, particularly where liquidity and trading infrastructure are improving. Ho said GSR remains focused on market infrastructure around tokenized assets and the tools needed to support scale and adoption.

Prediction markets also drew interest from investors. Simpson, for instance, said there is “incredible growth potential” in applications and ancillary businesses built on top of prediction platforms as usage grows. Maven 11’s van Esch, however, expects prediction markets to receive less funding in 2026 after heavy early capital inflows, arguing that real usage and adoption may grow more slowly than many might anticipate.

Coinbase Ventures’ Tejwani highlighted what he described as “markets for everything,” from prediction markets and perpetual futures to real-world assets. He also pointed to next-generation DeFi, privacy-focused applications, and early-stage intersections between crypto, AI, and robotics as longer-term opportunities.

“AI is starting to lean on crypto rails for data, identity, and security, especially as robotics and agents need trusted sources and verifiable inputs,” Tejwani said. “Agentic commerce is early but will be huge; machines will pay machines with internet-native money.”

Simpson also sees a rise in activity in agentic, stablecoin-driven payments. She said the modern internet was not designed to cater to agents (which are fundamentally bots)–rather, it was designed to actively guard against that kind of activity. “In the new agentic paradigm, parts of the web will be redesigned, and stablecoins are the native payment method for this brave new world,” she added.

Cosmo Jiang, general partner at Pantera Capital, told The Block that the firm is spending more time and building expertise at the intersection of AI and blockchain. It is also continuing to invest at the application layer, including DeFi and DePIN.

Interestingly, Robot Ventures’ Pai said in the crypto-AI category, hype has “dramatically” outpaced execution, and it is likely to see less funding next year. “Many of these projects remain solutions in search of a problem, and investor patience has worn thin,” Pai said.

Dragonfly’s Hadick echoed that view, saying that while the firm continues to think long term about other categories like AI, “evidence of anything real happening at the intersection of AI and crypto is still next to zero.”

Some investors also flagged blockchain infrastructure as an area likely to see less funding, particularly new Layer 1 networks and tooling. With the market already crowded and questions around value capture still unresolved, only highly differentiated infrastructure projects are likely to attract capital, according to GSR’s Ho and Tribe Capital’s Revsin.

Token sales and ICO-style fundraising outlook

Token sales or initial coin offerings (ICOs) re-emerged in 2025, but investors said they have not replaced venture capital and are unlikely to do so.

Several VCs described token sales as cyclical and increasingly selective. Revsin said retail participation could rise if public equities flatten, though speculative excess outpacing real utility remains the main risk. GSR's Ho said token sales can be a useful price-discovery tool when done well, but broader market sentiment still matters.

Pai expects token-based fundraising to expand, especially for teams seeking retail alignment and distribution, but said top-tier projects will continue to pair token sales with venture backing. “The future is hybrid,” he said, noting that capital is only one part of building a company.

Van Esch is broadly supportive of ICOs and onchain fundraising platforms, arguing that blockchains are well-suited for capital formation and early participation. At the same time, he said it remains unclear whether raising via liquid tokens is always optimal for building durable businesses.

Tejwani described onchain fundraising as a structural shift, pointing to Coinbase’s recent $375 million acquisition of Echo as an example of capital formation moving onchain. Jiang also expects innovation around token-based incentives and fundraising to accelerate as regulatory clarity improves.

Hadick struck a more cautious tone, saying token sales have generated more headlines than actual capital formation and are often closer to airdrops than true fundraising. In his view, venture capital is still likely to hold a near monopoly on funding the strongest companies and protocols.

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