Crypto venture capitalists are scaling back their risk tolerance, steering clear of the latest trends, and scrutinizing investments more closely, as stated by Bullish Capital Management director Sylvia To.
“VCs are exercising greater caution now. It’s not merely about the narrative. Previously, one could easily invest by saying, ‘Oh, here’s another L1 that’s meant to be an Ethereum killer,’” To remarked during an interview with Cointelegraph at Token2049 in Singapore.
“Then, you saw a surge in new chains being introduced,” she continued, noting that the market became fragmented with numerous funds flowing into new layer 1s and infrastructure, which is no longer sustainable.
“Who has been using it?” is the key question, To states
“We’ve reached a stage where betting on new narratives is no longer a viable option,” she explained, emphasizing that investments must now be approached with a more critical perspective.
“You really have to start considering all this infrastructure being developed in the industry, but who has been utilizing it? Are there sufficient transactions? Is there enough volume on these chains to justify the substantial funds being raised?”
To mentioned that by 2025, many projects have been securing funds at inflated and often unwarranted valuations, heavily depending on future cash flow expectations.
“The projected revenue and the pipeline they’re proposing aren’t concrete,” To stated, adding that it has been “a sluggish year.”
Crypto startup funding saw a downturn in Q2 2025
Eva Oberholzer, the chief investment officer at VC firm Ajna Capital, recently mirrored To’s sentiments.
Oberholzer informed Cointelegraph on Sept. 1 that VC firms have become significantly more discerning regarding the crypto projects they back, marking a shift from the earlier cycle due to market maturation.
“It’s increasingly about predictable revenue models, institutional engagement, and irreversible adoption,” Oberholzer noted.
Related: Crypto VC firm Archetype closes $100M early-stage fund
Galaxy Research’s latest VC report revealed that crypto and blockchain startups raised a total of $1.97 billion across 378 deals in the second quarter of 2025, indicating a 59% reduction in funding and a 15% decrease in deal count compared to the prior quarter.
In total, venture capital investments in crypto amounted to $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, secured $750 million in May to create “alpha-generating” strategies through Bitcoin-related purchases.
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