Why are six VCs aggressively raising over $6 billion in the "arms race" during a bear market?

Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

The crypto bear market is still ongoing, but some highly signal-worthy actions have already appeared in the primary market.

On May 4th, Haun Ventures, a venture capital firm founded by former U.S. federal prosecutor Katie Haun, announced the completion of a $1 billion fundraising round. The fund will be split evenly between early and late-stage funds, each allocating $500 million, primarily investing in crypto and blockchain startups over the next 2 to 3 years, while also expanding into AI agents, fintech, and alternative assets across intersecting sectors.

Just one day later, a16z announced that its fifth crypto fund, Crypto Fund 5, had completed fundraising, securing $2.2 billion in committed capital. The fund will continue to focus on the crypto market, targeting segments that are most easily overlooked during cycle rotations but have the greatest potential to create long-term value, transforming new infrastructure into products used daily.

Looking further back in time, you’ll see this isn’t coincidence but rather a “collective consensus” among top VCs.

In February this year, Dragonfly’s Fund IV completed a $650 million raise; at the end of February, multiple media outlets reported that Paradigm was seeking to raise up to $1.5 billion for its next fund; in March, ParaFi announced it had completed a $125 million raise; in late April, sources revealed Blockchain Capital was raising $700 million for two funds… In less than three months, these six VC firms alone have quietly amassed over $6 billion in capital.

More critically, this capital was raised not during the hottest market times but during a bear market phase characterized by liquidity drought in altcoins, declining valuations in the primary market, and persistent industry sentiment downturn. As a16z partner Chris Dixon said, “We are in a relatively quiet phase,” this is not a pursuit in a bull market but a typical counter-cyclical deployment.

Primary Market Divergence

Focusing solely on the $6 billion raised might lead to the misconception that “the primary market is warming up,” but the reality is far more complex. Looking at the current survival status of leading and mid-sized VCs, a clear divergence trend has emerged in the primary market.

For most small and medium-sized VCs, this cycle is proving much more difficult than expected. Due to the continued underperformance of altcoins (almost missing the entire bull run), coupled with tightening liquidity in secondary markets, exit channels are severely constrained, and unrealized gains on paper are gradually shrinking or turning negative over long unlocking periods. The underperformance of investment returns directly erodes LP confidence, making it increasingly difficult to raise new funds.

As a result, we see that most small and medium-sized VCs are forced into passive contraction during the bear market: some choose to reduce fund sizes and decrease deal frequency; others shift to pure secondary funds; some simply exit the market altogether. Many small and medium VCs that gained high visibility during the last bull cycle have now disappeared from the scene.

In stark contrast, the top-tier VCs still actively raising funds. Although their investment pace has slowed with the market turning bearish, their structural advantages mean their dominance in the primary market is actually strengthening.

Regarding these structural advantages, first, top VCs often have stronger resource monopoly capabilities, allowing them to more effectively capture scarce high-quality projects (typical examples include Kalshi, backed by a16z and Paradigm; Polymarket, backed by Dragonfly and ParaFi; Blockchain Capital, which invested in Coinbase and Circle); second, top VCs can cover a more complete investment cycle, from early pre-seed and seed to later stages like Series A and B, providing more opportunities for follow-on investments or amplified returns; third, top VCs have greater room for trial and error, with larger asset management scales allowing them to withstand higher failure rates and bet on longer-term narratives; fourth, the brand effect of top VCs grants them stronger bargaining power, often securing more favorable terms even within the same funding round compared to smaller VCs.

This structural difference in advantages ultimately leads to market divergence, with the Matthew effect becoming more pronounced — in a bull market, small and medium VCs could still turn the tide with a few lottery-like deals, but in a bear cycle, this trend will only become more evident.

What Are These $6 Billion Looking At?

According to disclosures from these six VC firms, the newly raised $6 billion is allocated across the following sectors and directions:

• Dragonfly: bullish on crypto financialization, emphasizing stablecoins, prediction markets, agent payments, on-chain privacy, and real-world asset tokenization;
• Paradigm: expanding beyond crypto into AI, robotics, and other frontier tech fields;
• ParaFi: stablecoins, asset tokenization, institutional-grade on-chain financial products;
• Blockchain Capital: focusing on early-stage and growth-stage crypto startups;
• Haun Ventures: optimistic about next-generation financial infrastructure, including stablecoins, asset tokenization, prediction markets, and agent economy;
• a16z: mentioning stablecoins, DeFi, prediction markets, asset tokenization, and other financial infrastructure, while believing that in the era of AI explosion, the inherent features of crypto networks can still address issues of transparency and verifiability in software.

Putting together the public statements of these six VCs, we see that although their focus areas still differ somewhat, there is a clear convergence overall.

The most core consensus is undoubtedly centered on new-generation on-chain financial infrastructure represented by stablecoins, asset tokenization (RWA), prediction markets, and on-chain payments. Whether it’s Haun Ventures, a16z, Dragonfly, or ParaFi, these keywords are repeatedly mentioned in their new fund directions. To some extent, this also indicates a shift in the investment logic of the crypto industry. Compared to the previous cycle, which was more driven by sentiment, this round’s top VCs are more focused on infrastructure projects that have already demonstrated real demand and have the potential to serve traditional financial flows long-term.

In addition, top VCs are increasingly investing in AI-related layouts, with Paradigm explicitly stating it will allocate some funds to AI and robotics; Haun Ventures and Dragonfly also mentioned agent-related directions. The reason behind this trend is straightforward: on one hand, AI has become the most certain mainline in the global tech industry today, and top VCs cannot afford to be absent; on the other hand, the crypto industry is also trying to prove that it is not just a marginalized narrative under the AI hype but can become part of the foundational infrastructure of the AI era — especially as the agent economy rises, the original openness, composability, and permissionless nature of crypto networks are beginning to reassert their value.

Bear Market Fundraising Is Essentially Betting on the Next Cycle

For VCs, the bear market is often the phase that truly determines future patterns.

While bull markets make fundraising easier, project valuations tend to have higher entry thresholds. Only when market sentiment is low, liquidity is dried up, and industry narratives falter do VCs’ judgment-based opportunities for excess returns truly expand.

Looking back at past cycles, bear markets do not kill high-quality projects but instead accelerate market reshuffling, allowing “gold to shine faster.” That’s why, even amid persistent industry gloom, top VCs continue to raise funds counter-cyclically.

Because what they are truly betting on is never “the present,” but who will emerge as the new Circle, the new Hyperliquid, or the new Polymarket in the next cycle.