How much money do VC firms still have in their hands that are committed to the primary market?

Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

Who understands the current state of the crypto primary market better than anyone? It’s naturally those VCs who are still active in the market.

In recent days, multiple investors from Pantera Capital, Crucible Capital, Blockworks, and Varys Capital held a small discussion on X about the industry’s primary-market situation. Although their views differ somewhat, their debate may help us get one step closer to understanding the state of the primary market.

Counterintuitive Reality: VCs Aren’t Short of Money, but There Aren’t Many Investment Opportunities

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

Demirors believes that, overall, the “supply side” of early founders and projects in the crypto industry isn’t as large as in other high-growth industries. Over the past 4 years, this gap has become increasingly clear—which is also why this VC has started shifting its focus away from the crypto market.

Venture capital in crypto has been developing for 10 years, but the truly validated directions that can generate “VC-level returns” are actually only a few: stablecoins/payments, exchanges, and financial products. For VC investors and frontline founders, today there are fewer breakout hits and longer cycles in this industry—so requirements for industry understanding, resilience, and long-termism are higher than before, and therefore the bar from seed to Series A is also rising.

Although there are still some “epoch-defining” founders in the industry who are building companies that define categories (the job of a VC is to find them and win the opportunity to invest in them), the reality is that there is a clear gap between the stories founders are telling and what VCs can reasonably invest in.

After Demirors published the short article, many VC peers began discussing the topic.

Several investors agreed with Demirors in their replies. Blockworks co-founder Mippo followed up with a summary: they agree with Demirors. The problem in the primary market today is that there aren’t enough excellent founders and projects. In fact, on the VC side there is already more than enough capital to invest—yet at the same time, VC capital in early rounds is in excess, while VC capital focused on later-stage growth remains clearly insufficient.

Local Differences: Where Exactly Is the Money Concentrated?

On the question of whether VC money is concentrated in the early discovery stage or in the later growth stage, the views of Pantera Capital investor Mason Nystrom and Varys Capital venture capital head Tom Dunleavy were completely opposite, and the two sides also engaged in a heated debate.

Dunleavy went first and said he disagreed with Mippo’s view that “early-stage money is oversupplied and later-stage money is undersupplied”: “I have a completely opposite view. The mid-to-late-stage crypto VC capital right now is actually very abundant—mostly coming from funds that are recently raised or currently fundraising, such as Paradigm, Multicoin, Pantera, Dragonfly, and so on. This doesn’t even include traditional VCs that have partial exposure to the crypto market—instead, it’s early rounds and earlier that are more underfunded.… As long as you haven’t completely shifted to focusing on AI, there are many interesting projects you can invest in.”

But as an insider at one of the late-stage VCs Dunleavy mentioned (Pantera), Nystrom strongly rebutted Dunleavy’s claim. He believed that now, the industry’s VC capital is more concentrated in early stages rather than Series A, Series B, or even later.

Nystrom ran the numbers: if a fund wants to focus on Series A or Series B fundraising, it needs to invest in at least 20–25 projects, and each project requires large amounts of capital—Series A is about 15 million USD, Series B is about 40 million USD—by this calculation, a fund focusing on Series A needs an AUM of at least 300 million USD, and a fund focusing on Series B also needs at least 800 million USD. This doesn’t even include reserved funds; such funds usually require reserving 10% - 50% cash on hand. How many funds in the industry meet this requirement?

So the situation is that there may be at least 50 funds in the industry with AUM below 100 million USD, but funds with AUM above 400 million USD may be only around 15. The number of true big players who can participate in Series B and beyond is extremely small. There may indeed be more later-stage funding in fintech (for example, stablecoins), but these projects have already “graduated” into the traditional VC system and can no longer be treated simply as primary-market crypto projects.

But Dunleavy was not convinced. In his response, he attached Galaxy’s Q1 primary-market financing report and mentioned that this year’s Q1 saw the total number of financings across the industry drop by 49%, but the amount per financing increase by 76% (about 36 million USD)—the total financing amount for seed rounds and earlier stages was only 268 million USD; Series A was 370 million USD; Series B was 1 billion USD; and later rounds reached as high as 27.2 billion USD (mainly from Kalshi and Polymarket).

Dunleavy’s counterargument was that the data proves that in 2025, more than 50%+ of industry investment flows went to later stages (already a historical high), and in 2026 it will reach 80%+.

Dunleavy’s final estimate of the current funding situation in the primary market was as follows—available funds in the Series A and later-stage phases are approximately 6 billion to 7 billion USD, concentrated among 5 to 6 large institutions; available funds in the seed round and earlier-stage phases are approximately 1 billion to 2 billion USD, distributed across dozens of smaller, more dispersed funds.

Nystrom then responded again, saying that in the data Dunleavy shared, the vast majority of later-stage investments actually come from “graduated” fintech projects—projects that have long entered the traditional VC view and received investment, so they should not be counted as part of the industry internally.

Nystrom then continued arguing based on Dunleavy’s conclusion that “only 5–6 funds can invest in Series A and beyond, but dozens can invest in seed”: “This means that if you can’t persuade 1 of the 6 funds, you basically have no chance; but in the early stage, as long as 1 out of the dozens of funds is willing to invest, you can make it. These two sides’ ‘accessibility’ are completely unequal.”

In addition, funds like Pantera Capital that are capable of investing in later-stage rounds do invest in seed rounds as well—but the reverse does not work. And with more and more VCs turning into liquidity-focused funds, the real scale of capital that can invest in later-stage rounds is far smaller than what the numbers show.

Compared with “Is there money,” the real issue is “Where is the money, and can you get it”

In the end, neither side could persuade the other. But based on a direct clash between two leading frontline investors, we may have gained a clearer view of the reality of the crypto primary market—“whether there is money” does not seem to be the core issue; it’s “where the money is and whether it can be accessed.”

At first glance, industry funding still looks plentiful, and even shows a high degree of concentration in later rounds. But from real experience, both VCs and entrepreneurs are facing a market that is being tightened more “structurally”—early-stage money appears dispersed but competition is fierce, while mid-to-late-stage money appears sufficient but the thresholds are extremely high. This also means that the rules of the primary market game are changing. The era when you could complete the financing closed loop by relying on narratives, traffic, and short-cycle exits is rapidly fading; replacing it is a financing environment that depends more on real business progress, long-term capabilities, and a clear path to predictable growth.

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