Crypto venture capitalists are reducing their risk tolerance, steering clear of the latest trends and taking a more analytical approach to their investments, as noted by Sylvia To, director at Bullish Capital Management.
“VCs are being much more cautious now. It’s not merely about narratives. Previously, you could easily fund another layer 1 project with claims of it being the next Ethereum killer,” To told Cointelegraph during an interview at Token2049 in Singapore.
“Then you saw a surge of new chains,” she explained, noting that the market has become fragmented, with many funds funneled into new layer 1s and infrastructure, which is no longer sustainable.
“Who has been using it?” is the critical question, says To
“We’re at a point where you can’t just gamble on these new stories anymore,” she remarked, emphasizing the need for a more discerning investment strategy.
“You really need to consider that a lot of infrastructure is being developed in this space, but who is utilizing it? Are there sufficient transactions? Is there enough volume on these chains to warrant the funds being raised?”
To indicated that in 2025, many projects have been securing funding at inflated and often unjustified valuations, heavily relying on eventually projected cash flows.
“The potential revenue and pipeline aren’t established,” To noted, mentioning that it has been “a sluggish year.”
Crypto startup funding fell in Q2 2025
Eva Oberholzer, the chief investment officer at Ajna Capital, a VC firm, recently echoed To’s views.
Oberholzer stated to Cointelegraph on Sept. 1 that VC firms have become significantly more selective about the crypto projects they back, marking a shift due to market maturation.
“It’s more about reliable revenue models, institutional reliance, and irreversible adoption,” Oberholzer commented.
Related: Crypto VC firm Archetype closes $100M early-stage fund
According to a recent VC report by Galaxy Research, crypto and blockchain startups secured $1.97 billion across 378 deals in the second quarter of 2025, indicating a 59% drop in funding and a 15% decrease in deal count compared to the prior quarter.
In total, venture capital investment in crypto reached $10.03 billion over the three months ending in June.
Leading the way, Strive Funds, an asset management firm founded by American entrepreneur and politician Vivek Ramaswamy, raised $750 million in May to create “alpha-generating” strategies through Bitcoin-related investments.
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