In the evolving landscape of cryptocurrency and blockchain investment, venture capitalists (VCs) are recalibrating their strategies and becoming noticeably more conservative. This shift towards a more cautious approach has been fueled by recent market dynamics, as highlighted by Sylvia To, Director at Bullish Capital Management, during a recent interview at Token2049 in Singapore.
The Shift in VC Attitude
To emphasized that VCs are now deploying a significantly more critical lens when considering new investments, a marked departure from previous trends. In the past, it was common for investors to throw capital at new projects simply because they were positioned as potential "Ethereum killers" or driven by the latest hype. However, as the market has grown increasingly fragmented, marked by an overabundance of new Layer 1 blockchains and infrastructure projects, this “spray and pray” philosophy is no longer tenable.
“Who has been using it?” is a sentiment that captures the current investor skepticism. VCs are now expected to validate the usage, transaction volume, and overall viability of new technologies before committing funds. The optimism that allowed numerous projects to secure funding at inflated valuations without concrete user bases is rapidly fading.
Fundraising Trends
Recent data underscores this shift in funding dynamics. In the week ending September 29, 2023, a collective total of $312 million was raised among 18 crypto projects, reflecting a cautious approach from investors. Comparatively, in the second quarter of 2025, venture capital investment in the crypto sector sharply declined, with total funds amassed dropping to $1.97 billion across 378 deals—a staggering 59% decrease from the previous quarter. The softening landscape has provoked a re-evaluation of revenue models and project viability among investors.
Economic Viability and Revenue Models
Eva Oberholzer, Chief Investment Officer at Ajna Capital, echoed To’s sentiments, asserting that VC firms are now prioritizing investments based on established revenue models and institutional adoption rather than speculative potential. “It’s more about predictable revenue models, institutional dependency, and irreversible adoption,” she noted, emphasizing that the threshold for investment is now anchored in observable metrics of success rather than future projections.
As many crypto startups continue to rely on optimistic forecasts to attract funding, the gap between expectation and reality is widening. The growing realization that many projects lack sufficient transaction volume to justify their funding rounds signals a critical reevaluation in the VC community.
Market Saturation and Investor Caution
The crypto market has witnessed a proliferation of new projects and platforms, contributing to saturation. As noted by To, the initial allure of being a first-mover in “next big things” like Layer 1 blockchains has diminished. Investors are increasingly wary of projects that do not demonstrate clear user engagement or operational sustainability.
This newfound caution is also reflected in the decision-making processes of venture capital firms, which are now identifying investment opportunities that align with the tenets of stable revenue generation and tangible market readiness rather than just theoretical potential.
The Road Ahead
As the crypto landscape continues to mature, the emphasis on rigorous analysis and due diligence will likely become the norm rather than the exception. VCs are beginning to adopt a sustainable growth mindset—one focused on enduring market practices rather than buying into speculative bubbles.
This paradigm shift is poised to reshape the future of blockchain and cryptocurrency investments. As companies work to solidify their positions, the market may favor projects that can showcase demonstrable blockchain utility, user engagement, and viable revenue strategies.
Key Takeaways
Critical Lens for Investments: Venture capitalists are applying a rigorous evaluation process before investing in new crypto projects, as characterized by a notable absence of speculative enthusiasm.
Declining Fundraising: Crypto venture funding has significantly decreased over recent months, indicating a broader trend towards conservatism among investors.
Focus on Economic Viability: The emphasis has shifted toward predictable revenue models and substantial institutional adoption.
Market Saturation: The market’s increasing saturation has left investors questioning the viability of numerous high-profile blockchain projects.
- Future Outlook: As the market matures, a more measured and analytical investment approach is likely to dominate, favoring companies with robust and demonstrable value propositions.
Conclusion
In a rapidly changing investment landscape, crypto VCs are indeed becoming more conservative, fostering a new era of scrutiny and measured optimism. This transition is essential for building a more robust and sustainable ecosystem in the world of blockchain and cryptocurrencies. As investors demand greater accountability and operational evidence from crypto projects, the industry’s long-term health and success will hinge on a commitment to viability over hype.
