Crypto Funding Reality Check: VCs Want Revenue, Not Just Hype

• Crypto VCs now demand proven user bases and transaction volumes instead of chasing trending narratives and speculative infrastructure plays.

• Q2 2025 funding dropped 59% to $1.97 billion across 378 deals, reflecting stricter investment criteria and market maturation.

VCs investing in cryptocurrency projects have considerably narrowed their investment criteria, shifting off of speculative narrative-based investments into revenue-oriented opportunities. According to industry executives, this shift is a paradigm shift in the evaluation and approval of digital asset investments.

Sylvia To of Bullish Capital Management said that investors are no longer pursuing trending stories that lack a significant signal of market demand and usage. The last cycle witnessed many funds pouring money into layer-one blockchains and infrastructure initiatives which were disruptive but had no established user base. The current investment world requires an answer to some very important questions regarding the volume of transactions, the number of active users, and the amount of revenue that will be generated before capital is invested in projects.

Funding Declines as Standards Rise

Cryptocurrency venture capital activity was significantly reduced in the second quarter of 2025, with startups raising just $1.97 billion in 378 deals. This was a drastic 59% reduction in funding over the previous quarter, and a 15% overall reduction in the number of deals.

Galaxy Research data show that total venture investment was $10.03 billion over the three months ending in June, despite the quarterly decrease. The market fragmentation that has been brought about by the overdevelopment of infrastructure without the users adopting it has made investors rethink their evaluation approach.

Eva Oberholzer of Ajna Capital affirmed that venture firms no longer focus on speculative future projections but on predictable revenue models and institutional adoption. Most projects that were to be funded in 2025 were based on unstable revenue streams and overvaluations that were not grounded in justification or support.

Strive Funds, which raised $750 million in May to invest in Bitcoin-related investment approaches and purchases, provided the largest funding round. This deployment showed that the large capital pool is still there to support projects with evident value propositions and institutional-quality investment thesis frameworks.

According to industry observers, the year 2025 is a transitional period in which the cryptocurrency industry will have grown out of narrative-based speculation and into business model validation.

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