Author | Yogita Khatri
Original text:
https://www.theblock.co/post/326970/the-funding-trump-bitcoin-crypto-vcs
In recent days, the crypto space has been abuzz with excitement following Trump's victory and Bitcoin's surge past $93,000. Reflecting back to when I first started covering crypto in 2018, Bit prices were just around $3,000. And now, we are witnessing the arrival of the future.
I spoke to 12 crypto venture capitalists. While the euphoria around Trump's win and Bit's skyrocketing prices is palpable, most investors are sticking to their long-term plans. However, some are adjusting their strategies to be more attuned to the latest trends and shifts in the political and market environment.
"The industry's excitement is understandable. Only insiders can truly appreciate the scale of the destruction that past governments have inflicted on innovation. So the outside world still underestimates how much exciting product creation will happen once founders regain the freedom to experiment," said Lasse Clausen, founding partner at 1kx.
Arianna Simpson, general partner at a16z crypto, echoed similar sentiments, noting that the past few years have been challenging for the crypto industry. But she expects "a significant policy shift" to greatly benefit Web3 builders and companies.
New opportunities from clearer crypto regulation
Given the expected clarity on crypto regulation under the Trump administration, investors predict more founders will start venturing into the Web3 space. This week, Portal Ventures closed its second fund, a $75 million vehicle focused on investing in crypto startups at the seed stage. Founder Evan Fisher says he expects some seasoned founders who have sold their businesses and are sitting on hundreds of millions of dollars to gradually enter the crypto space, having previously held back due to legal and regulatory risks, but will now do so as the risk environment improves. "We'll see more top-tier founders gradually entering the crypto space," Fisher said.
Jake Brukhman, founder and CEO of CoinFund, said the firm is gearing up for a "supercycle" in the crypto markets. CoinFund has ample capital across its seed, venture and liquid investment programs, and has added six new team members in the past two to three months.
Investment focus: Crypto with AI, DeFi and more
Looking ahead, crypto VCs are training their sights on high-potential areas including crypto with AI, DeFi, tokenization of real-world assets (RWA), infrastructure, stablecoins, and payments.
Many investors believe the convergence of crypto and AI will be the next transformative trend. Ed Roman, co-founder of Hack VC, described crypto with AI as the most attractive and promising category in crypto currently, envisioning a multi-layered Web3 AI stack leveraging the cost-efficiency of decentralized computing networks. "This is a trillion-dollar market serving Web2 customers," Roman said. "AI is not a fad like Non-Fungible Tokens, but has created real business value and may be the most important technological innovation since the mobile phone and the internet."
However, Roman noted that the healthy development of crypto with AI is largely dependent on the health of the Web2 AI category, which is influenced by NVIDIA. So Hack VC is closely watching NVIDIA as a "loose proxy" for crypto with AI.
Balder Bomans, chief investment officer at Maven 11 Capital, is also bullish on crypto with AI startups, particularly AI-driven DePIN protocols that provide computing resources for AI model training. CoinFund's Brukhman added that most retail investors next year will want to gain exposure to the AI space through the crypto markets, and predicted "the summer of 2025 will be the summer of decentralized AI (deAI)."
The DeFi resurgence
With increased institutional adoption, DeFi is regaining attention. Hack VC's Roman pointed out that DeFi has recently suffered from high yields, making US Treasuries more attractive, but the expected rate cuts under Trump could make DeFi competitive again. Roman views DeFi as "a generational opportunity to integrate finance."
Clausen emphasized that traditional financial institutions may start tokenizing real-world assets and using DeFi infrastructure at scale. "Imagine how inefficient trading, clearing and settlement is in traditional finance, whereas on a decentralized exchange (DEX), these three can be done in a single trade, with no counterparty risk, and the exchange operator's behavior can be publicly verified as non-fraudulent," Clausen said. "It's like fishing with dynamite, no contest."
Erick Zhang, executive partner at Nomad Capital and former Binance executive, also sees DeFi poised for growth, especially as Altcoin activity reawakens and centralized exchanges face ongoing challenges. Will Nuelle, general partner at Galaxy Ventures, and Thomas Klocanas, general partner and head of venture at BlockTower Capital, also predicted expansions in DeFi, RWA tokenization, stablecoins and payments.
Nuelle said: "Post-Trump, it's clear that one of the biggest obstacles to stablecoin applications in payments - the banking relationships to interface with the fiat currency system - has become easier. We hope/expect banks providing legitimate crypto currency services will not fear retaliation from the FDIC or other agencies, which should ease their ability to integrate with the clearly growing use cases."
Emerging focus areas
Consumer applications and infrastructure categories are also gradually gaining attention. a16z crypto's Simpson said she is "particularly excited about crypto consumer applications, as this category was especially adversely impacted by the policy environment of the previous administration." She also expressed continued interest in the development of DePIN and infrastructure projects.
Alvaro Gracia, partner at Borderless Capital, also emphasized the growth potential in DeFi and DePIN, especially as Bit's dominance gradually shifts towards Altcoins. Gracia said the $100 million DePIN fund he manages still has around $70 million to deploy, with plans to invest over the next two to three years.
Clausen of 1kx added that his firm's focus areas are infrastructure, middleware and consumer applications, particularly those that require banking integration, which were previously hindered by regulatory constraints.
Adam Winnick, managing partner at Finality Capital Partners, is optimistic about the infrastructure space, particularly highlighting re-staking and zero-knowledge tech startups as key focus areas. Miko Matsumura, managing partner at Gumi Cryptos Capital, said he is interested in infrastructure and scaling projects that solve "ordinary problems" for the general public, not just crypto-specific problems.
However, not all investors are as excited about infrastructure. Bomans of Maven 11 said the firm has shifted its focus to application-layer investments over the past 12 months, as the rise of powerful monolithic blockchains and continued improvements in modular stacks have cleared most scaling bottlenecks.
Fisher of Portal Ventures said his firm has little interest in infrastructure projects, preferring commercial startups with clear distribution advantages and strong user demand.
Zhang of Nomad Capital also mentioned that his firm has taken a more cautious approach to deploying capital into infrastructure projects, especially Layer 1 and Layer 2 networks, as he believes "most infrastructure projects are essentially 'infrastructure hype,' with their success often depending on the founding team's ability to manage the narrative and branding, and there are limited teams that can stand out in this unique dynamic."
Potential risks from the Trump administration
While the Trump victory has brought new optimism to the crypto space, some venture capitalists warned of potential risks that could impact the industry's trajectory.
Clausen of 1kx raised concerns about Trump's immigration policies, arguing that a reduced labor supply could lead to wage stickiness, which could be detrimental to risk assets like crypto.
Nuelle of Galaxy Ventures pointed out that if "Trump is too laissez-faire on the crypto industry", it may repeat the FTX incident. He believes that balanced bipartisan legislation and a clear position on digital assets will create the most stable long-term value.
Zhang of Nomad Capital emphasized that if bold proposals such as Bitcoin becoming a strategic reserve asset of the United States fail to be realized quickly, the "Trump effect" may lose momentum. He stated that unmet expectations may dampen market enthusiasm.
Roman of Hack VC also mentioned a key question: will the United States actively accumulate new Bit, or just hold the existing confiscated Bit? He said that regardless of the outcome, it is a positive development for the crypto field. But if the United States actively establishes a Bit reserve, this may become a new standard for the policies of other countries, thereby having a more far-reaching impact on the crypto industry.
