According to CryproRank, in 2024, the volume of venture investments in cryptocurrency projects exceeded $13 billion. This figure highlights not only the maturity of the industry but also a sustained interest in new technologies from funds and private investors. Against the backdrop of the development of DeFi, AI services, infrastructure projects, and other areas, cryptocurrencies remain one of the most promising markets for investments.
What are venture investments?
Venture investments are investments in startups and early-stage projects that have high growth potential but are associated with increased risk.
The term 'venture' comes from the English word venture. This type of investment is aimed at supporting innovative ideas that have not yet proven their viability but have strong transformational potential. Most often, venture investments are directed towards technological sectors such as blockchain, artificial intelligence, or biotechnology.
At the same time, a distinctive feature of venture investments is their comprehensive approach — often investors not only provide capital but also accompany the project at all stages of its development. They help with legal issues, strategic planning, marketing, and attract partners to increase the chances of success.
Funding is carried out through specialized funds, which can be independent organizations or divisions of large companies. These funds attract capital from private and institutional investors, as well as reinvest their own funds. One of the most notable examples of such a fund is Sequoia Capital, which manages over $55 billion and whose investment portfolio includes hundreds of companies across different industries and stages of development.
Why are venture funds interested in cryptocurrencies?
The interest of venture funds in cryptocurrencies is driven by the high potential for profit and the ability of blockchain to transform traditional industries. Projects like Ethereum and Solana have allowed early investors to achieve significant profits, making the crypto industry attractive for investment. Among other reasons:
Promising directions
Segments such as decentralized finance, Web3, and infrastructure solutions open up wide opportunities for funds. They invest in products that create new business models, whether it be platforms for data management, tokenization services for physical assets, or payment solutions.
Audience and innovations
The cryptocurrency market attracts young, tech-savvy users who are willing to actively support projects, increasing the chances of success. For funds, this is a chance to invest in innovative ideas that attract wide audience attention and open opportunities for transforming traditional sectors. An example is GameFi or NFT.
Portfolio diversification
Cryptocurrencies help diversify investments due to their low correlation with traditional assets and relatively high liquidity. With a competent approach, this allows for risk management in unstable conditions.
At the same time, most funds are aware of the challenges of the crypto market, including volatility, regulatory uncertainties, and technological risks.
How do venture investments work in crypto projects?
Venture funds investing in the crypto market have developed a special funding mechanism that takes into account the specifics of the industry. Instead of traditionally acquiring shares in companies, investors typically acquire the right to a portion of the token issuance, which becomes available as it is released, according to the vesting mechanism.
For this reason, one of the most important elements of a crypto project is tokenomics — the model for the distribution and use of tokens. Typically, venture funds receive preferential allocations of tokens, access to which is opened gradually to prevent price pressure. These conditions are usually outlined in the project's technical documentation, where deadlines, volumes, and rules for asset distribution are specified.
It is worth noting that due to the pursuit of profit, venture capital can 'break' the tokenomics of the project, leading to reduced opportunities for retail investors and asset overvaluation.
Stages of financing crypto projects
Investments in crypto projects occur in stages, and each stage can be divided into several rounds of fundraising. This allows investors to assess the startup's progress and minimize risks. The main stages are:
Seed Round. At this stage, the project is still at the idea stage. Funds are raised for developing a minimum viable product (MVP) or testing hypotheses. Contributors are most often angel investors or small venture funds willing to take very high risks;
Series A round. Here, the project team presents an early version of the product. Investments are raised to refine the technology, test it, and enter the market. This stage attracts larger investors who can invest from hundreds of thousands to millions of dollars;
Series B round. At this stage, the project already has a full-fledged product demonstrating market potential. Funding is directed towards improving functionality, expanding the team, and infrastructure. This attracts large venture funds and institutional investors;
Series C round. The final stage, at which the project has already proven its success. Funds are raised for scaling, global expansion, and strengthening market positions.
Some startups may pass through intermediate stages or combine them, depending on the funding model and market conditions.
Popular directions of venture capital in the crypto industry
According to CryptoRank, some of the most significant areas for venture capital in 2024 were:
DeFi: lending platforms, liquidity, staking, decentralized exchanges, and others.
GameFi: gaming projects that combine blockchain and virtual economies to monetize gaming activity;
SocialFi: projects aimed at creating decentralized social platforms and ecosystems that allow users to earn from their content;
CeFi: centralized platforms for managing cryptocurrencies;
infrastructure projects: blockchain networks, solutions for scaling them, cross-chain bridges, oracles, and others.
At the same time, venture capital investments are not just money, but also strategic support for projects at all stages of their life cycle. It is thanks to venture capital that startups like Ethereum $ETH , Solana $SOL , and Polygon $POL have been able to grow into giants of the industry, attracting millions of users and transforming traditional markets.
Top 7 venture investors in cryptocurrency
Throughout its development in the crypto industry, its own pool of venture investors has formed. Some of them are multi-sectoral, while others focus exclusively on blockchain and related technologies. The top funds include:
Polychain Capital
A fund founded by former Coinbase employee Olaf Carlson-Wee, known for its investments in infrastructure projects, staking, and crypto lending. The Polychain portfolio includes major projects such as Coinbase, Uniswap, Solana, and Cosmos, making it one of the most influential players in the market.
Sequoia Capital
One of the oldest and most recognizable venture funds in the world, famous for its early investments in Google, Apple, and Cisco. Sequoia Capital's crypto portfolio includes projects such as Binance, Animoca Brands, StarkNet, Filecoin, and LayerZero, demonstrating a strategic interest in Web3 funds and blockchain ecosystems.
Binance Labs
Originally a subsidiary of the cryptocurrency exchange Binance, and since 2024, an independent company. The fund has made investments in projects such as 1inch, Aptos, Sui, Polygon, and Axie Infinity. Currently, Binance Labs continues to develop its portfolio and support new initiatives.
Coinbase Ventures
Coinbase's investment division specializes in supporting crypto projects at all stages of development. Among the most well-known investments are Aptos, ConsenSys, OpenSea, Yuga Labs, StarkNet, and Polygon. The fund also helps its partners integrate into the Coinbase ecosystem.
Dragonfly Capital
A venture fund with Asian roots and well-known partners including Bybit and MatrixPort. It is known for its expertise in blockchain and has financed projects such as zkSync MatterLabs, Near Protocol, Avalanche, and Ethena.
Andreessen Horowitz (a16z)
A legendary venture fund from Silicon Valley, which became a pioneer in blockchain investments. The a16z portfolio includes Coinbase, Ripple, dYdX, Optimism, Uniswap, and Sui. Moreover, the fund was one of the first investors in Polychain Capital. a16z continues to actively support the development of Web3 and decentralized technologies, but it also operates well beyond the boundaries of the crypto industry.
Paradigm
A fund created by former employees of Coinbase and Sequoia Capital, specializing in early investments in crypto projects. The Paradigm portfolio includes StarkNet, Cosmos, Uniswap, Argent, and Symbiotic. The fund combines the experience of venture investors with a deep understanding of the market.
Trends in venture investments in cryptocurrency in 2025
Over the past three years, the landscape of venture investments in the crypto market has undergone significant changes. While 2022 was marked by record funding volumes amid a bullish market and financial incentives in major economic blocs, the subsequent bearish phase led to a substantial decline in investor activity.
However, the end of 2024 showed signs of recovery — according to CryptoRank, in October and December, monthly investments from venture funds again exceeded $2 billion. This trend suggests a possible increase in interest in crypto projects.
In the second half of 2024, the attention of venture funds focused on the following segments, which are likely to remain relevant in 2025:
artificial intelligence (AI);
developer tools;
decentralized exchanges;
payment solutions;
oracles and data providers.
It should be noted that several factors could contribute to an increase in the influx of venture capital into the crypto market in 2025, including increased regulatory clarity in the US, EU, and Asia, as well as new developments aimed at the scalability of blockchains and the integration of AI. In addition, market stabilization and the expected rise in prices for major cryptocurrencies in 2025 stimulate early-stage investments.
Risks of venture investments in cryptocurrency
Despite the enormous prospects, venture investments in cryptocurrency come with significant risks. The flip side of profits in the hundreds or even thousands of percent includes:
High failure rate of startups
Statistics show that the majority of crypto startups do not reach their goals due to implementation issues, lack of funding, or absence of market demand. Even well-planned projects can face unforeseen difficulties. According to GrowthList, the share of failed blockchain projects in 2024 reached 95% — the highest figure among the industries reviewed in the report.
Errors in valuation
Venture funds can misjudge the potential of technologies or teams by investing in projects that cannot provide a working product or do not fit current market trends. Insufficient development of tokenomics or a weak business model can also lead to failure. However, this problem is also characteristic of retail investors.
Regulatory threats
Most countries are still in the process of forming a regulatory framework for the crypto industry. Sudden changes in legislation, bans, or restrictions on activities can halt the development of even the most promising startups.
Technical failures and vulnerabilities.
Blockchain technologies are complex and require a high level of security. Vulnerabilities in smart contracts, hacker attacks, or network failures can lead to the loss of user funds and undermine investor trust.
High volatility
Cryptocurrencies are subject to sharp changes in value, which can affect the liquidity of project tokens, delay vesting, or reduce attractiveness for users.
Even seemingly successful startups can suddenly collapse. Examples from the Terra blockchain and the FTX exchange serve as a vivid reminder that even mature companies face high systemic risks associated with the specifics of the industry and its regulation.
Conclusions
Competition in the crypto industry continues to grow, and the development of new solutions requires significant resources. In such conditions, investment funds become not just a source of funding but an important element of the ecosystem that helps startups realize ideas and scale.
For blockchain projects, venture funding is not only capital but also access to experience, connections, and support, which is especially important in the early stages of development. For investors, such investments represent a chance to gain significant profit by entering promising projects at an early stage. This mutually beneficial collaboration forms the basis for the growth and sustainability of the cryptocurrency market.
Overall, in recent years, venture investments have played a key role in the development of the blockchain industry, accelerating the adoption of innovations and contributing to the creation of technologies that can change the financial and technological sectors.
