Venture funds rethinking investment strategy: from speculative frenzy to profitability

The cryptocurrency market is experiencing a fundamental shift in investment logic. Against the backdrop of declining crypto asset prices and a surge in mergers and acquisitions within the industry, venture funds are facing harsh realities: many projects that thrived during the speculative boom have failed to create sustainable businesses with real revenue. This change in investor mindset marks a transition from token-driven logic to the traditional paradigm of startup valuation.

From Popularity to Measurable Metrics: How Venture Funds Are Changing Evaluation Criteria

Cryptocurrency-focused venture funds are sharply reevaluating their investment criteria. Previously, project success was measured by narrative popularity, token liquidity volume, and market share captured, but today the focus shifts to classic entrepreneurial metrics: product-market fit, user retention levels, and willingness to pay for the service.

Despite a favorable regulatory climate and support from government agencies, retail investor demand—the engine of the old logic—has significantly weakened. This has prompted venture funds to rethink their roles. Santiago Roel Santos, founder and CEO of the cryptocurrency venture company Inversion, directly states the problem: “Web3 as a category is currently almost devoid of investment appeal. People have abandoned NFTs, blockchain games, and countless DeFi platforms that existed only for the sake of existence, without genuine innovation. Even venture funds specializing in cryptocurrencies with accessible capital are actively migrating into fintech, stablecoin markets, and forecasting platforms. Everything else is fiercely competing for investors’ attention.”

Wave of Reorientation: Crypto Incubators Explore New Territories

This shift in priorities is clearly visible. Capital and Tangent, long-standing crypto incubators, have sharply reoriented toward deep technologies, beginning to invest in robotics startups like Apptronik and Figure. This shift in investment focus indicates a fundamental reevaluation of which segments hold genuine potential.

Venture funds are systematically moving away from high-risk bets—NFTs, Web3 social platforms, and blockchain games no longer define early-cycle speculative narratives. Instead, there is a clear capital shift toward stablecoins, predictive market infrastructure, and related fields such as fintech and artificial intelligence. As a result, even native crypto-focused venture funds are beginning to diversify their portfolios beyond the pure crypto ecosystem.

Competition with Traditional Venture Firms: Challenges for Specialized Funds

This transition is complicated by increasing competition from traditional venture firms. Catherine Van, general partner at Portal Ventures, confirms the trend of crypto funds expanding into adjacent segments: many native venture funds are choosing to diversify into fintech or AI.

Tom Schmidt, general partner at the venture fund Dragonfly, is more pessimistic about the outlook: “If I hear in the near future about the closure or downsizing of more and more funds, I wouldn’t be surprised. They are also facing intense competition from traditional venture firms for the most promising deals in the Web 2.5 sector.” This assessment reflects the growing pressure faced by crypto-only venture funds.

Adaptation or Obsolescence: The Future of Venture Funds in the Cryptocurrency Industry

The paradox of the current moment is that, as traditional institutions penetrate the crypto space, mere crypto-specific knowledge is no longer enough. Venture funds trying to survive in this new landscape must either adapt—broadening their expertise and investment horizons—or risk marginalization. The capital market is consolidating around what truly creates value, and venture funds need to heed this signal.