How much money do VC firms focusing on the primary market still have?

Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

Who knows the current state of the primary market in cryptocurrency best? Naturally, it’s those VCs still active in the market.

In recent days, several investors from Pantera Capital, Crucible Capital, Blockworks, and Varys Capital have held a small-scale discussion on the primary market situation in the industry on X. Although their views on the market differ somewhat, through their debate, we might gain a better understanding of the current state of the primary market.

Counterintuitive Reality: VCs are not short of money, but good investment opportunities are scarce

On the evening of April 20, Crucible Capital partner and GP Meltem Demirors posted a short article on X explaining why the number of crypto industry financings has significantly decreased.

Demirors believes that, overall, the “supply side” of early-stage founders and projects in the crypto industry is not as large as in other high-growth sectors. Over the past four years, this gap has become increasingly apparent, which is why this VC has started shifting focus outside the crypto market.

The crypto market’s venture capital activity has been developing for 10 years, but only a few directions have been truly validated and capable of generating “VC-level returns”—namely stablecoins/payments, exchanges, and financial products. For VC investors and frontline founders, the current industry’s breakout hits are fewer, cycles are longer, and therefore the demands for industry understanding, resilience, and long-term vision are higher. As a result, the thresholds from seed to Series A are also rising.

While some “epoch-defining” founders still exist, building category-defining companies (VC’s job is to find them and secure investment opportunities), the reality is that there is a clear gap between the “stories founders tell” and what VCs can reasonably invest in.

After Demirors’ short article was published, it sparked discussions among many VC peers on this topic.

Several investors responded below, agreeing with Demirors’ views. Among them, Blockworks co-founder Mippo summarized that the current primary market’s problem is the insufficient number of excellent founders and projects. In fact, VC firms have enough capital to invest—but at the same time, early-stage funding rounds are oversupplied, while late-stage growth-focused VC funds are still significantly lacking.

Divergence in opinions: Where is the funding really concentrated?

Regarding whether VC funds are mainly concentrated in early discovery stages or later growth stages, Pantera Capital investor Mason Nystrom and Varys Capital venture lead Tom Dunleavy held opposing views and engaged in a heated debate.

Dunleavy first stated that he disagreed with Mippo’s view that “early-stage funds are oversupplied while late-stage funds are insufficient”: “I hold the completely opposite view. Currently, there is actually a lot of funding for mid-to-late-stage crypto VCs—mostly from recent and fundraising funds like Paradigm, Multicoin, Pantera, Dragonfly, etc. This doesn’t even include traditional VCs that have some involvement in crypto. In fact, seed-stage funds are the ones that are more underfunded… As long as you’re not fully shifting to AI, there are many interesting projects to invest in.”

However, Nystrom, an insider from one of Dunleavy’s listed late-stage VCs (Pantera), strongly rebutted Dunleavy’s statement. He believes that the industry’s VC funds are now more concentrated in early stages rather than Series A, B, or even later rounds.

Nystrom did some calculations: if a fund wants to focus on Series A or B financing, it needs to invest in at least 20-25 projects, with large amounts per project—about $15 million for Series A, around $40 million for Series B—which means a fund focusing on Series A would need at least $300 million in assets under management, and one focusing on Series B would need at least $800 million. This doesn’t include reserved capital, which usually requires reserving 10%-50% of cash. How many funds in the industry meet this requirement?

So the current situation is that there are probably at least 50 funds with less than $100 million in AUM, but only about 15 with over $400 million. Very few players can participate in Series B and beyond; there might be more late-stage funds in fintech (like stablecoins), but these projects have already “graduated” into traditional VC systems and can no longer be simply considered crypto market projects.

But Dunleavy was unconvinced. He responded by posting Galaxy’s Q1 primary market financing report, noting that in Q1, the total number of financings across the industry decreased by 49%, but the amount per deal increased by 76% (about $36 million)—seed rounds and earlier rounds totaled only $268 million; Series A was $370 million; Series B reached $1.1 billion; later rounds soared to $2.72 billion (mainly from Kalshi and Polymarket).

Dunleavy countered, citing data that more than 50% of industry investment in 2025 is flowing into later stages (a new high), reaching over 80% in 2026.

Dunleavy finally estimated the current primary market’s capital situation—about $6 billion to $7 billion in available funds for Series A and later stages, concentrated in 5-6 large institutions; about $1 billion to $2 billion for seed and earlier stages, spread across dozens of smaller, more dispersed funds.

Nystrom responded again, pointing out that most of the late-stage investment data Dunleavy posted actually comes from “graduated” fintech projects, which have long entered the traditional VC sphere and are no longer considered part of the crypto industry.

Nystrom then continued to argue along Dunleavy’s conclusion that “only 5-6 funds can invest in Series A and beyond, but dozens can invest in seed”—“This means if you can’t convince one of those six, you’re basically out; but in early stages, as long as one fund among dozens is willing to invest, you can survive.” The ‘accessibility’ of the two is completely unequal.**

Furthermore, funds like Pantera Capital that have the capacity to invest in later stages also invest in seed rounds, but the reverse isn’t true. Plus, more VCs are shifting into liquidity funds, so the actual scale of funds capable of investing in later stages is much smaller than the numbers suggest.

Compared to “whether there is enough money,” the real issue is “where the money is and whether it can be accessed”

In summary, neither side can persuade the other, but through this direct confrontation between two top-tier investors, we gain further insight into the reality of the crypto primary market—“whether there is money” doesn’t seem to be the core issue; “where the money is and whether it can be obtained” is.

On the surface, industry funds still appear abundant, even highly concentrated in later rounds; but in practice, both VCs and entrepreneurs face a market that is becoming more “structurally tight”—early-stage funds seem dispersed but highly competitive, while mid-to-late-stage funds seem ample but with extremely high entry barriers. This indicates that the rules of the primary market are changing. The era of relying on narratives, traffic, and short cycles to close funding is rapidly fading; replaced by a more environment that depends on real business progress, long-term capability, and predictable growth paths.

For VCs, this is a cycle of “fewer deals, more judgment”; for entrepreneurs, it’s a survival test of crossing longer cycles and higher thresholds.