Author: Yogita Khatri
Compiled by: TechFlow
Quick Overview
In 2024, crypto venture capital funding grew 28% year-over-year to $13.7 billion, but still did not reach historical highs.
Top crypto VCs believe that in 2025, funding will primarily flow to startups that demonstrate strong product-market fit.
According to The Block Pro's funding data, crypto venture capital funding saw significant growth in 2024, increasing 28% year-over-year to around $13.7 billion. While this represents an improvement over 2023's performance, and the overall market sentiment is more optimistic this year, it has still not recovered to previous historical highs.
Looking ahead to 2025, top crypto VCs hold a cautiously optimistic view on the future. While most believe funding levels are unlikely to return to the heights of 2021-2022, there is a consensus that startups demonstrating strong product-market fit and having an actual user base will be more likely to attract capital.
Here are the specific views of leaders from institutions like Dragonfly, Pantera, Multicoin, Coinbase Ventures, Binance Labs, and Galaxy Ventures on the funding outlook for 2025.
Dragonfly: Betting on DeFi, CeFi, and Stablecoins
Dragonfly's general partner Rob Hadick says crypto venture capital funding is poised for significant growth in 2025 due to a more relaxed US regulatory environment, potentially sustained token price appreciation, and accelerated institutional capital inflows. However, he also notes that funding levels are unlikely to return to the highs of 2021-2022 in the near term, reflecting VCs' caution to avoid repeating past mistakes.
Dragonfly is currently focused on supporting exceptional founders in decentralized finance (DeFi), scaling platforms, centralized finance (CeFi), and stablecoins/payments. While emerging areas like crypto AI and decentralized physical infrastructure networks (DePINs) are also on their radar, Hadick says these are still in experimental stages.
In contrast, investment in traditional areas like security, tokenization, and interoperability may decrease as the market's focus gradually shifts to newer directions. He also predicts that decentralized social media will face significant challenges due to a lack of scalability and product-market fit.
Pantera: Bullish on Crypto AI, DePINs, and New Layer 1s
Pantera Capital's general partner Lauren Stephanian says crypto venture capital funding is expected to grow further in 2025 as investors gain confidence in a crypto-friendly US policy.
However, she also cautions that "the bull market won't last forever," and therefore "it remains to be seen when we start to see a slowdown in capital deployment" next year.
Pantera continues to invest broadly in crypto and blockchain, but is particularly excited about crypto AI, DePINs, and new Layer 1s that support more application-level functionality.
Multicoin: Doubling Down on the Solana Ecosystem
Multicoin Capital is increasing its exposure to DeFi applications, particularly within the Solana ecosystem. According to Multicoin Capital's co-founder and managing partner Kyle Samani, Solana has outperformed Ethereum and Layer 2 ecosystems on key on-chain metrics this year. "We expect this trend to continue, and Solana ecosystem apps and protocols will stand out in the next cycle as more users, capital, project launches, and activity migrate to Solana."
Samani also notes that Ethereum may continue to face challenges and "could even enter a prolonged decline" as it faces fierce competition from Solana and other faster, cheaper blockchains. "Unless Ethereum can improve its competitiveness, developers, users, and capital will shift to other chains that better meet their needs."
Additionally, Multicoin is highly bullish on stablecoins, which Samani describes as "potentially one of the most important technological and financial innovations of our generation."
"Stablecoins are poised to become a formidable force in 2025," Samani says. "There is huge global demand for the US dollar, and stablecoins are the most efficient way to access the dollar. The design space is vast, and we are still relatively early in the adoption curve."
Coinbase Ventures: Focusing on On-Chain Economics, Deploying to the Application Layer
Coinbase Ventures' Hoolie Tejwani told The Block that the firm expects to remain "highly active" in 2025 and beyond, and is already positioned to seize market opportunities. Tejwani is optimistic about the potential for positive regulatory developments following the arrival of a crypto-friendly Trump administration and a pro-crypto Congress in January 2025.
Tejwani revealed that Coinbase Ventures will continue to invest broadly in on-chain economics, focusing on "where the best developers are putting in effort on nights and weekends." He is particularly bullish on the application layer, as infrastructure matures and internet-scale applications become viable. Focus areas include stablecoin payments and finance, cross-applications of crypto AI, on-chain consumer applications (like social, gaming, and creator tools), and DeFi innovations.
At the same time, Tejwani emphasizes that Coinbase Ventures has not entirely abandoned the infrastructure layer, as there are still unresolved technical challenges and potential for innovation in the tools space.
Binance Labs: Focusing on Fundamentals and User Adoption
Binance Labs, Binance's $10 billion venture capital and incubation arm, says its investment director Alex Odagiu that the firm will remain a "evergreen" investor, continuously supporting startups in web3, AI, and biotech, regardless of market cycles.
Odagiu expects crypto venture capital to maintain strong momentum in 2025, but emphasizes that Binance Labs will "focus on fundamentals" rather than chasing price fluctuations or market hype. He points out that projects with real-world use cases, product-market fit, strong teams, and sustainable revenue models will be the most competitive.
Galaxy Ventures: Bullish on Stablecoins and Tokenization
Galaxy Ventures' general partner Will Nuelle says stablecoins, especially in the payments space, continue to demonstrate strong product-market fit and remain a core focus for the firm's capital deployment. While he acknowledges that the pace of tokenization adoption has lagged behind stablecoins, he sees immense investment potential in this area and plans to further explore these opportunities.
Although tokenization still lags behind stablecoin adoption, Nuelle sees significant potential for investors. Galaxy Ventures plans to further explore these opportunities. However, Nuelle is less optimistic about metaverse-related projects, predicting that funding will lag in 2025 due to a lack of clear adoption signals.
Hashed: Cautious Deployment, Expanding Global Investments
Hashed's CEO and managing partner Simon Seojoon Kim holds a cautiously optimistic view on the market outlook for 2025. He mentioned that Trump's comments about Bitcoin potentially becoming a US Treasury asset may hint at a potential shift in institutional sentiment. However, he believes funding levels are unlikely to return to the highs of 2021-2022 in the short term, unless a "black swan" event occurs in the macroeconomic or geopolitical realm.
Kim believes that the market development in 2025 will be influenced by the following factors: further clarity in the US regulatory environment, growth in institutional activities in the Asian market, and progress in infrastructure driving the implementation of real-world applications. However, he also warned that regulatory uncertainty, macroeconomic pressures, and geopolitical tensions could dampen market growth.
Hashed's investment focus will be on data infrastructure, institutional-grade DeFi applications, regulated stablecoin payment systems, and crypto AI infrastructure, which are believed to have clear product-market fit and mature business models. In contrast, he expects speculative GameFi projects, undifferentiated Layer 1 and Layer 2 protocols, and NFT platforms lacking actual revenue models to face reduced financing.
Hashed plans to complete the fundraising for its third venture capital fund in the first quarter of 2025 and plans to launch a new investment vehicle in Abu Dhabi to enable direct token investments in accordance with the local regulatory framework. Kim stated that this is aimed at addressing the limitations of Korean-registered funds in direct token investment capabilities.
Hack VC: Betting on Crypto AI, Infrastructure, and DeFi
Hack VC's co-founder and managing partner, Ed Roman, expressed optimism about the prospects of crypto venture capital in 2025, expecting the market to grow significantly, provided that there are no unforeseen "black swan" events. He pointed out that a crypto-friendly policy environment and the resurgence of web3 entrepreneurial enthusiasm will be the key drivers of this growth.
Hack VC's investment focus is concentrated in three main areas: crypto AI, infrastructure, and DeFi. Roman explained that decentralized physical infrastructure networks (DePINs) leveraging GPUs provide a low-cost way to build multi-layered AI technology stacks, and the crypto industry's potential market size in serving web2 customers could reach trillions of dollars.
In the infrastructure domain, Hack VC is bullish on the development of scalability protocols, modular infrastructure, web3 security, Maximal Extractable Value (MEV) improvements, and account abstraction technology. The maturation of these technologies significantly enhances the user experience of decentralized applications.
In the DeFi space, Hack VC believes the current period is a "once-in-a-century opportunity" to reshape the financial system. Roman is particularly optimistic about stablecoin-based payments, as their widespread practical applications could create a "multi-trillion-dollar market." However, the firm is less optimistic about the prospects of NFTs, expecting most to lose value, with only a few blue-chip assets able to retain their value.
Portal Ventures: Supporting Platforms with Both Infrastructure and Applications
Portal Ventures' founder and general partner, Evan Fisher, expects the market sentiment to improve in 2025, but the financing level may not recover to the peak of 2021-2022, as those two years had a unique macroeconomic environment.
Fisher, in an interview with The Block, stated that Portal Ventures is bullish on platforms that can provide both infrastructure and applications. Such platforms not only allow projects to better control the user experience but also drive the implementation of real-world use cases. However, he also pointed out that investments in more heavyweight infrastructure projects, such as zero-knowledge development platforms and middleware, may slow down, primarily due to the lack of a sufficient customer base and sustainable business models in these areas.
Blockchain Capital: Focusing on Stablecoin Infrastructure and DeFi
Blockchain Capital's general partner, Kinjal Shah, expects the financing level to increase in 2025 as the market performance continues to improve. However, she believes the peak financing levels of 2021-2022 are unlikely to be replicated, as the previous growth was largely driven by macroeconomic trends.
Shah stated that Blockchain Capital will maintain a flexible investment strategy, focusing on a few key areas, including stablecoin infrastructure, innovative distribution models, and DeFi platforms that can connect institutions and retail investors.
