Introduction
Crypto venture capital activity in the third quarter of 2025 remained depressed compared to prior bull market levels. While activity increased from the previous quarter, this was largely driven by a small number of later-stage deals. Valuations have increased to bull market levels, and early-stage activity remains healthy. The macro environment continues to present headwinds for fund managers seeking new allocations, and recent Q4 crypto market activity is likely to further deter allocators in Q4 and Q1 of 2026. Competition from vehicles like ETFs and digital asset treasury companies also added to the headwinds.
Still, despite remaining below 2021-2022 bull market levels, venture activity remains active and healthy overall. Sectors like stablecoins, AI, blockchain infrastructure, and trading continue to draw deals and dollars, and pre-seed activity remains consistent. Given the new administration’s focus on promoting bitcoin, crypto, and blockchain adoption, it’s possible that the United States’ longstanding dominance of the sector will grow further.
Key Takeaways
Venture capital investment in crypto startups was $4.59 billion (-59% QoQ) across 414 deals (-15% QoQ) in Q3 2025.
Later-stage deals captured 56% of the capital invested, while earlier-stage deals accounted for 44%.
The trading category received the most venture capital with $2.1 billion invested, led by $1 billion in Revolut and $500 million in Kraken.
The U.S. dominated capital and deal count again.
On the fundraising side, investors allocated $3.16 billion to 13 new crypto venture funds.
Venture Investing
Deal Count and Capital Invested
In Q3, venture capitalists invested $4.65 billion (+290% QoQ) into crypto and blockchain-focused startups and private companies across 415 deals (+9% QoQ).
In Q3, seven deals accounted for half of the venture capital deployed to crypto and blockchain-focused firms: Revolut ($1b), Kraken ($500m), Erebor ($250m), Treasury ($146m), Fnality ($135m), Mesh Connect ($130m), and ZeroHash ($104m).
On an annual basis, 2025 through Q3 has now outpaced 2023 and 2024 in capital invested, though deal count is not on pace to exceed those prior years.
Capital Invested and Bitcoin Price
In prior cycles, capital invested into crypto startups closely tracked the bitcoin price. Not this cycle. Bitcoin has risen significantly since January 2023 while venture capital activity has struggled to keep pace. Weak allocator interest in crypto venture, and in venture broadly, as well as competition from public market vehicles like ETFs and treasury companies, continues to compete with startups for capital.
Investment by Stage
In Q3 2025, 57% of capital was invested in later-stage companies, while 43% of capital went to younger companies.
On deal count, the share of pre-seed deals held flat QoQ and remains healthy relative to prior cycles. We track the percentage of pre-seed deals as a way to gauge the robustness of entrepreneurial behavior. The share of later-stage deals has been rising over the past few quarters, reflecting the growing maturity of the market overall.
Valuation and Deal Size
VC-backed crypto company valuations have risen in 2025, with Q1 exceeding the 2021 highs and Q3 nearly matching it. Valuations across the broader VC complex have also risen in 2025, though have not yet matched their 2021 highs. Median deal size in crypto also reached new all-time highs in Q3 2025. In Q3 2025, the median crypto deal size was $4.5 million while the median pre-money valuation was $36 million.
Investments by Category
Companies in our Trading/Exchange/Investing/Lending category raised the largest amount of capital from crypto VCs, regaining the top spot by pulling in more than $2 billion, led by $1 billion invested in Revolut and $500 million invested in Kraken. This category has the most entrenched business models in crypto and has historically accounted for the largest share of VC investment.
Market share of funds raised by category over time shows some interesting trends beyond the continued dominance of the Trading/Exchange/Investing/Lending category. For instance, the Web3/NFT/DAO/Metaverse/Gaming category has declined since its heyday in the PFP era, while Payments/Rewards and Banking have been on the upswing.
By deal count, Web3/NT/DAO/Metaverse/Gaming is still drawing interest, but at earlier stages than in the past (and thus less capital deployed). Other notable categories include Infrastructure (which includes firms that provide staking and blockchain-access services), AI, DeFi, Payments/Rewards (notable given the rise of stablecoins), and Tokenization (which changes in regulatory posture have made much more exciting).
By deals, the space is becoming more diverse when viewed over time.
Investment by Stage and Category
Breaking down capital invested and deal count by category and stage gives a clearer picture of what types of companies in each category are raising funds. In Q3 2025, the vast majority of capital invested in Trading/Exchange/Investing/Lending went to later-stage companies (mostly Revolut and Kraken). In contrast, Banking and other categories featured raises by earlier-stage companies.
Analyzing the distribution of invested capital across different stages in each category reveals the relative maturity of various investment opportunities.
As in prior quarters, in Q3 the top categories of investment featured deals across a healthy dispersion of stages.
Examining the share of deals done by stage in each category offers insight into the various stages of each investable category.
Investment by Geographic Location
In Q3 2025, 47% of capital invested went to companies headquartered in the United States. The United Kingdom was second with 28%, followed by Singapore with 3.8% and the Netherlands with 3.3%.
The story was largely the same by deal count though a bit more dispersed. Companies headquartered in the United States accounted for 40% of deals completed, followed by Singapore with 7.3%, the United Kingdom with 6.8%, and Hong Kong with 3.6%.
Investment by Cohort
Companies founded in 2018 accounted for most of the capital raised, while companies founded in 2024 accounted for the highest number of deals.
Venture Fundraising
While total amount raised increased QoQ, fundraising for crypto venture funds remains challenging. The macro environment and turmoil in the crypto market from 2022-2023 have continued to dissuade some allocators from making the same level of commitments to crypto venture that they did in early 2021 and 2022. More recently, increased interest in artificial intelligence has also diverted some attention from crypto investing, while spot ETFs and treasury companies are also competing for institutional investment. In Q3 2025, the total capital allocated to crypto-focused venture funds was $3.16 billion across 16 funds.
On an annual basis, venture funds have raised more in the first three quarters of 2025 than the entirety of 2024 and are on pace to surpass 2023.
The average fund size has risen in 2025 to $163m, though the median has declined to $36m.
Summary
Sentiment is improving and activity is rising, though both are still both well below all-time highs. Prior bull runs in 2017 and 2021 featured a high correlation between VC activity and liquid crypto asset prices, but for the last two years activity has remained subdued while cryptos have risen. The venture stagnation is due to a number of factors, such as waning interest in previously hot crypto VC sectors like gaming, NFTs, and Web3; competition from AI startups for investment capital; and higher interest rates, which disincentivize venture allocators broadly.
Later-stage deals led have led in capital raised in 2025. The last three quarters have seen more capital invested in seasoned companies than fledgling enterprises, reflecting the growing maturity of the space. Pre-seed deal count as a percentage has trended down consistently as the overall industry has matured. With crypto being adopted by established traditional players, and a large cohort of venture-backed firms having found market fit, it’s increasingly likely that the golden era of pre-seed crypto venture investing has passed.
Spot ETPs and digital asset treasury companies (DATCOs) may be pressuring funds and startups. Several high-profile investments in the spot-based bitcoin exchange-traded products (ETPs) in the United States by allocators suggest that some large investors (pensions, endowments, hedge funds, etc.) may be gaining exposure to the sector via these large, liquid vehicles rather than turning to early-stage VC investing. Interest in spot-based Ethereum ETPs has increased over the last two quarters. Should that continue, or if ETPs launch covering other alternative layer-1 blockchains, demand for exposure to segments like DeFi or Web3 could flow to the ETPs rather than to the venture complex. The rise of digital asset treasury companies (DATCOs) in 2025 may also be competing with venture investment for allocator interest in the sector.
Fund managers still face a difficult environment. While capital allocated ticked up in 2025, new fund count has declined each of the last two quarters and remains near 5-year lows. Macro trends continue to present headwinds for allocators, but material shifts in the regulatory environment could augur a resurgence of allocator interest in the space.
The United States continues to dominate the crypto startup ecosystem. Despite a remarkably tricky and often hostile regulatory regime during previous years, companies and projects headquartered in the United States historically accounted for most deals completed and most capital invested. That trend has maintained this year with a new administration and Congress that have begun enacting the most pro-crypto agenda in history across a range of vectors. We expect U.S. dominance to increase, particularly now that the GENIUIS Act is law and especially if Congress can pass a crypto market structure bill, which would further entice traditional U.S. financial services firms to enter the space in earnest.
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