Institutional Investors Shift Focus to Larger Projects

In 2025, raising a crypto VC fund is challenging despite market optimism. Persistent LP funding challenges and post-scandal impacts contribute to the issue, altering investor strategies. Institutional focus is now on larger, safer, institutionally-supported projects.

Following the 2022 FTX scandal, The Block sold a majority stake to Foresight Ventures, severing ties with its past. Despite challenges, some funds still execute large deals, although overall deal numbers are down.

Mature Projects Favor Funds amidst Decreased Early-stage Deals

Crypto VC fundraising now features larger but fewer deals. Institutional investors favor mature, compliant projects with solid returns. This approach has significantly reduced early-stage financing opportunities.

Financial outcomes are affected as CeFi platforms and DePIN startups engage in substantial funding rounds. Historical data highlight that institutional selectivity has intensified since the 2022 market shift.

2022-Crisis Fallout Continues to Limit New VC Capital

Following historical patterns, crypto markets experience major impacts post-scandalous events, as seen with FTX’s 2022 collapse affecting funding. Similar challenges hindered fundraising efforts for newer projects.

Experts, including Mason Nystrom from Binance, underscore a tougher funding landscape for new projects due to limited LP capital. Mason Nystrom commented:

“The funding environment is tough due to upstream DPI and LP funding challenges. Funds are returning less capital to LPs, resulting in reduced net capital for new and existing VC firms, making financing tougher for founders.”

Historical analysis shows decreased capital availability for emerging VC firms.