Original Author: E. Johansson, L. Kelly, DL News
Original Compilation: Tao Zhu, Jinse Finance
Venture capital will make a strong comeback in 2025.
This is according to venture capital firms and market observers interviewed before the new year.
What will drive the market upswing? How much capital do investors hope to invest?
Mike Giampapa, General Partner, Galaxy Ventures
Mike Giampapa, General Partner, Galaxy Ventures
It's hard to overstate the potential impact on the crypto industry of the establishment of the most crypto-friendly executive and legislative branches in US history.
With a more favorable SEC, we expect enforcement actions to decrease, regulations to become clearer, and the likelihood of blockchain companies listing in the US to increase.
We are also more optimistic than ever that banks will be more open to participating in crypto, introducing stablecoin legislation, and broader crypto market infrastructure bills.
These measures will create the necessary transparency, guardrails, and protections for the industry's contractors and users.
Against this backdrop, the adoption of stablecoins and the use of underlying blockchains as financial rails are expected to accelerate in 2025.
Fintech companies - from upstarts to incumbents, from consumer-facing to B2B - will increasingly integrate with the crypto rails to provide customers with faster, cheaper, and more efficient financial services.
The use cases for stablecoins will continue to grow, extending beyond savings and payments to spending. We expect merchant acquirers and card networks to increasingly enable crypto payments at checkout, allowing users to use stablecoins as easily as fiat currency.
Alex Botte, Partner, Hack VC
By 2025, we expect crypto and blockchain venture capital to rebound to previous highs.
Galaxy data shows that venture capital is currently lagging significantly behind its Q1 2022 peak, when around 1,350 deals totaled about $12 billion in investment.
In Q3, this figure was $2.4 billion, down 80%, involving 478 deals (down 65%).
This gap is at least partly due to the continued lack of traditional venture capital and institutional investors, particularly in the US.
The private markets, especially early-stage venture capital, tend to lag the liquid markets, where major tokens like Bitcoin and Solana have recently hit new highs.
However, as the market cycle matures and investor confidence rebounds, we expect venture capital to increase, potentially even surpassing previous highs.
With the crypto-friendly Trump administration and Congress taking office, increased regulatory clarity in the US may attract more institutional participants than previous cycles, accelerating venture capital.
Robert Le, Crypto Analyst
Robert Le, Crypto Analyst, Pitchbook
We forecast that crypto venture capital will rebound in 2025, with total annual funding exceeding $18 billion, and multiple quarters exceeding $5 billion.
This would mark a significant recovery from the 2023-2024 period, with an average of $9.9 billion per year and $2.5 billion per quarter.
Macroeconomic stability, institutional adoption, and the return of generalist venture capital are likely to drive this trend.
Heavyweight firms like BlackRock and Goldman Sachs may increase their crypto participation, which in turn could boost investor confidence and regulatory trust, paving the way for broader institutional involvement.
Their participation could drive mainstream adoption and attract asset managers, hedge funds, and sovereign wealth funds to the crypto space.
Generalist VCs returning after a period of retreat may shift their focus to startups demonstrating traditional metrics like recurring revenue and measurable traction.
This approach could promote greater integration of crypto with AI, fintech, and traditional finance, emphasizing sustainable growth over speculative investment.
Improvements in global liquidity and declining interest rates will further boost venture capital, with token prices rising in line with public and venture markets.
However, this optimistic scenario depends on the stability of regulation (especially in the US) and continued macroeconomic conditions.
Karl Martin Ahrend, Founding Partner, Areta
Karl Martin Ahrend, Founding Partner, Areta
In 2025, we expect to see a surge in M&A and IPO activity, highlighting the transformative shift in the industry.
Traditional financial institutions are increasingly entering the space, seeking exposure to crypto projects with strong product-market fit. These companies often lack the in-house expertise to build solutions, driving a wave of collaborations and acquisitions.
At the same time, political tailwinds, including the possibility of a crypto-friendly US Securities and Exchange Commission under new leadership, are creating an optimistic mood for clearer regulations. This regulatory clarity, combined with advancements in security, is boosting investor confidence and paving the way for more public offerings and strategic transactions.
Looking ahead, this intersection of institutional interests and favorable regulatory shifts is likely to continue driving M&A and IPO activity, shaping the future of the industry.
