Crypto Venture Capital May Shift Toward Bitcoin Strategies as VCs Grow More Cautious on New Layer-1s

Crypto venture capital has grown far more selective in 2025: VCs now prioritize predictable revenue, real user activity and institutional support over narrative-driven ￰0￱ for crypto startups declined sharply in Q2 2025 as investors demand proven adoption and clear monetization ￰1￱ favor projects with real adoption and predictable revenue. Q2 2025 saw a 59% decline in crypto startup funding and a 15% drop in deal count. 18 projects raised $312 million in a single week; valuations often rely on future cash ￰2￱ venture capital: VCs are more selective in 2025—learn why funding fell in Q2 and how projects must prove adoption to attract ￰3￱ actionable guidance ￰4￱ 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 ￰5￱ 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 ￰6￱ 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 ￰7￱ noted that prior cycles allowed quick checks for new layer 1 projects without proven ￰8￱ approach has changed as market fragmentation exposed weak adoption across many ￰9￱ 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 ￰10￱ now question whether infrastructure has real traction—transaction volume and developer activity are the most scrutinized ￰11￱ 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 ￰12￱ are looking for active wallets, transaction volume and third-party integrations as proof points before investing. 18 crypto projects collectively raised $312 million during the week ending Sept. 29.) To observed that many projects raised funds at inflated valuations in 2025, often relying on projected future cash flows rather than demonstrated ￰13￱ a result, fundraising has slowed and investor scrutiny has ￰14￱ 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 ￰15￱ 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 ￰16￱ 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 ￰17￱ can crypto startups attract VC in 2025?

Startups must prove adoption, demonstrate predictable revenue, and show institutional ￰18￱ unit economics, strong on-chain metrics and partnerships that lead to measurable transactions are ￰19￱ active users : show daily active wallets, transaction volume and retention ￰20￱ revenue pathways : detail current or near-term revenue streams with conservative ￰21￱ product-market fit : list integrations, pilot customers or institutional ￰22￱ transparent governance : clear token economics and on-chain controls reduce perceived ￰23￱ 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 ￰24￱ now require on-chain evidence and predictable revenue to justify ￰25￱ 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 ￰26￱ metrics do investors prioritize today? Investors prioritize transaction volume, active users, revenue run rate, institutional partnerships and sustainable token economics when evaluating ￰27￱ Takeaways Selective capital: VCs now prioritize adoption and revenue over ￰28￱ down: Q2 2025 saw a 59% decline in funding and fewer ￰29￱ for founders: Focus on measurable usage, conservative financials and institutional traction to attract VC ￰30￱ Crypto venture capital in 2025 has moved from narrative-driven bets to disciplined underwriting centered on adoption and ￰31￱ that can demonstrate clear user activity and monetization are best positioned to secure ￰32￱ startups, the imperative is simple: prove your metrics and tighten your revenue model to align with investor expectations.

Author: COINOTAG — Published ￰33￱ referenced as plain text: Token2049, Messari, Galaxy Research, Strive Funds, statements from Sylvia To and Eva Oberholzer (plain text). , "description": "Crypto venture capitalists are more cautious in 2025, focusing on adoption and revenue as Q2 funding declines significantly."