Crypto VCs Are Choosing Later Stages, Says Truth Ventures
According to Truth Ventures, most capital is now flowing into later crypto rounds, while early teams in DeFi, layer-2, and tooling are finding it harder to get funded.
Key Takeaways
- Crypto venture capital is shifting toward bigger, later deals; last quarter, later-stage companies attracted 57% of the capital.
- Pre-seed deals made up just 19% of completed transactions, while investors are mainly waiting for traction and proven companies.
- According to Truth Ventures, the best opportunities are still in the founding stage, with attention on a real problem, early demand, and a sustainable model.
Crypto venture capital is increasingly shifting toward bigger, later deals, and according to Varun Datta of Truth Ventures, that is not a sign of discipline but of herd behavior. In his contribution to Crypto Long & Short, he points out that later-stage companies attracted 57% of capital last quarter, while pre-seed deals made up only 19% of completed transactions.
Capital Is Looking for Safety
Datta contrasts that shift with the image venture capital likes to project of itself: getting in early, accepting uncertainty, and finding value there. According to him, the opposite is often happening now. Funds wait until a company has traction, has become a familiar category, and other investors have already put down a term sheet. That lowers uncertainty, but it also raises the price and the competition for the same group of proven companies.
The figures he cites come from Galaxy Research’s Q1 2026 crypto venture capital report. It says investors allocated about $1.1 billion (€1 billion) to just eight new crypto venture funds, the lowest quarterly figure since the third quarter of 2020. In the first half of 2026, a total of $13.3 billion (€11.5 billion) flowed into 435 funding rounds, but the split remained uneven: capital concentrated in specific sectors and companies, while the number of deals stayed far below the 2022 peak.
Where the Early Opportunities Are
According to Datta, the most interesting opportunities are still in the founding stage, where a lot of crypto infrastructure is being built before the market matures. He points to earlier cycles in which layer-2 networks, DeFi protocols, and key developer tools were already getting funding before their market really existed. He also notes that AI attracted 61% of global venture capital investments in 2025, leaving crypto founders with less attention from investors.
For European crypto readers, that matters because funding for early teams often says something about where the next wave of products and infrastructure will emerge. The shift toward larger, later rounds can mean young projects have a harder time raising capital, while established names attract money more easily. At the same time, the inflow of traditional financial players shows that crypto venture capital is becoming more tightly linked to the broader financial sector. That is also visible in the rise of tokenization, where players like Wall Street Makes Tokenization a Strategic Priority are increasingly focusing on blockchain infrastructure for existing financial products.
Three Things to Watch
Datta says investors should mainly look for three signals at this stage. First, a real problem, for example around payments, liquidity, interoperability, compliance, or developer experience. Second, early demand, such as developers who keep using a tool or customers who help shape the product. Third, a model that can survive multiple market cycles, with sustainable economics, a thoughtful token structure, and a clear path to distribution.
His main point is simple: those who wait until uncertainty disappears often miss the biggest upside. According to Datta, the job of venture capital is not to smooth away risk, but to figure out which risks are worth taking.
