Is crypto venture capital dying out?
Source: Token Dispatch Author: Vaidik Mandloi Compiled and collated by: BitPushNews created an era's top investor and began leaving it as one of the largest cryptocurrency exclusive funds ever formed. Paradigm recently raised $1.2 billion to begin investing in startups in the fields of artificial intelligence (AI), robotics, and aerospace. They've even completely removed the word “crypto” (crypto) from their website! Their investment logic is: Cryptocurrency was only their first frontier, but there are so many other new things happening right now that they must not turn a blind eye. Coincidentally, Framework Ventures also closed a $400 million fund in June and began expanding their investment reach beyond the crypto sector, and they are no exception. Over the past year, almost every leading crypto specialty fund has begun to drift towards broader topics and investment licensing. In the first quarter of 2026, only 8 new crypto-specific venture capital funds were established globally, the lowest since 2020. This article will explore in depth whether crypto-specialty venture capital is actually dying out as a fund category. If so, how does this shuffle map into the life cycle of these funds, and what does it mean for crypto startups — they will now have to compete for attention in multi-industry portfolios. The life cycle of professional funds Crypto professional funds came into being because they were willing to take the time to build a competitive advantage and were the only ones willing to take and underwrite this risk at the time. Understanding how Solidity contracts actually work and connecting with anonymous developers on the Discord channel—these aren't things Tiger Global's growth equity partners were able to touch in 2017. To understand whether crypto VC is coming to an end as an investment category, it would be beneficial to see how the specialty fund category has evolved in history, as this phenomenon has happened more than once in the past. Between 2006 and 2011, Climate Tech (Climate Tech) became mainstream as an investment logic. VCs have set up clean energy exclusive funds for the same reason that crypto VCs set up exclusive blockchain funds: they think they have keenly captured an epoch-making technological shift before generalists (generalists) reacted, and wanted to build a new investment institution around this firm belief. They poured more than $250 billion into clean energy startups, but lost more than half of their capital. Interestingly, the technology itself actually worked, and today's clean energy market is extremely large — which has caused the cost of solar energy in this sector to drop dramatically by 85% over the same period. What the VCs misunderstood, however, was that they hardwired the same model applied to software companies and threw $5 million in seed round checks to companies that actually needed $200 million in project financing and took 15 years to make a profit. The Energy Initiative (Energy Initiative) of the Massachusetts Institute of Technology (MIT) conducted an ex post facto review and found that the venture capital model was fundamentally flawed in the field. Professional VCs completed the experimental phase by taking technical risk funding, funded early R&D, and gave the field credibility to attract larger capital; however, once the technology matured enough to allow infrastructure lenders and project finance facilities (project finance facilities) to underwrite, the information advantage of professional investors disappeared. Data source: MIT Energy InitiativeSpac (a special absorption merger and acquisition company) has also evolved a similar trajectory. To add background, SPAC is a “blank check company” with no actual business, raising capital through an IPO and then merging with a private company to help it go public faster than a traditional IPO. In 2020 and 2021, some investors saw it as a replicable vehicle and built entire companies around them. Chamath Palihapitiya raised $1.6 billion in SPAC exclusive capital. But by 2022, SP established in 2021...
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