a16z has poured out $500 million in a month, while smaller funds are closing their doors in droves: Where is crypto VC money flowing?

Original Author: Ben Lakoff, CFA

Original Translation: TechFlow

Editor's Note: Carta's latest report is titled "Venture Capital is Back," but the recovery is only in paper valuations (TVPI); real money (DPI) hasn't returned to LPs yet. This monthly financing report breaks down the respective positions of GPs and LPs in H2 2026: who is making money, who is struggling, and what this logic looks like when applied to crypto venture capital. Author Ben Lakoff is a licensed CFA specializing in early-stage crypto investments, with direct opinions and high data density. Attached at the end are all crypto financing deals and hackathon results for June.

Gm!

Welcome to the June Deal Flow Digest, a snapshot of all the crypto financing I tracked last month.

This month's feature article digs into VC fund performance. Carta released its Q1 2026 VC Fund Performance Report, with the headline "Venture Capital is Back." But paper returns are returning much faster than cash. Let's break down what TVPI and DPI really mean, what GPs and LPs will each face in H2 2026, who the real winners are, and what this logic specifically looks like for crypto VC.

Don't forget to check the table at the end for all June deals, plus recent hackathon and Demo Day results (in the links).

Carta tracked 2,775 funds holding approximately $119.3 billion in assets. The data shows that median fund valuations for almost every recent vintage have increased, fundraising pace is accelerating, and the overall outlook for venture capital has improved significantly.

From 2017 to 2024, the median TVPI for almost every vintage has been climbing, and has done so for six consecutive quarters. TVPI (Total Value to Paid-In) measures what a fund is worth now, including unrealized book value. The valuation reset that crushed everyone's books in 2022 and 2023 is essentially over.

That's the good news. But the crux of the story is: the books are back (paper gains), but the cash hasn't arrived yet.

Venture Capital is Recovering, But Only Unrealized Paper Value (TVPI) is Rising

Let's start with the genuinely positive part. The median TVPI for the sample has started moving upwards again for almost every recent vintage. Valuations first stopped falling, then started recovering, and the funds holding these assets mechanically became more valuable.

Figure: Median TVPI by fund vintage has recovered for six consecutive quarters

Source: Carta Q1 2026 Report

Who is driving this growth? Primarily the top tier.

90th percentile valuations across all stages are soaring, and most of this comes from a single sector. Carta's companion private markets report shows that AI has absorbed a record share of every dollar venture capital invests. If your fund has AI exposure, your books are healthy. If you are in the "pick-and-shovel" infrastructure business or betting on things outside the narrative, your "recovery" will be much weaker.

So this rising tide is not lifting all boats. It's basically only lifting (significantly) the ones carrying foundational models. Not surprising.

This determines how you should read the numbers in the headline. High TVPI doesn't equal a good fund. It's a snapshot reflecting what someone, somewhere, is theoretically willing to pay, not the money that has actually hit LP accounts.

No One is Actually Getting Cash (DPI)

This is the part the recovery story skips. DPI (Distributions to Paid-In) measures the cash a fund has actually returned to LPs, and this number remains very low.

For 2019 and 2020 vintage funds, the median DPI is only slightly above zero, and over half of these funds haven't returned a single cent to LPs. These are funds that are five to six years old.

Figure: Median DPI for 2019 and 2020 vintage funds is only slightly above zero, with over half having yet to return any cash

Source: Carta Q1 2026 Report

The older vintages, which should be better, are actually worse. Funds from 2017 and 2018 are nearly a decade old, in the latter half of their lifecycle, when distributions should be occurring. Yet, less than 20% of these funds have reached a DPI of 1x, meaning they've returned the LPs' initial capital.

The problem lies with the J-curve refusing to complete its latter half. Early on, funds generate negative IRRs as capital is deployed. Then, as valuations rise and exits materialize, the curve should bend upwards. Valuations are indeed rising (as TVPI shows), but exits are not materializing. The IPO window has only cracked open for a select few names, M&A is picky, and the rest are stuck with high price tags unable to move.

PitchBook, Preqin, NVCA, Wellington – their assessments for 2026 all point to the same thing: liquidity is the bottleneck. It's that simple. The commonly discussed antidote is the secondary market, continuation vehicles, GP-led transactions, and LPs selling their stakes for cash instead of waiting for traditional exits. This will rapidly transition from niche to more common practice.

For GPs, the signal is uncomfortable but simple. A fund with great TVPI but near-zero DPI will start facing tough questions over the next 12 to 18 months. LPs have been very patient throughout the reset period. They want to see cash before they recommit. Those who can proactively manage a liquidity path (partial exits, secondaries, continuation funds) will have an advantage over those who can only keep reporting pretty paper numbers.

Venture Capital is a Power Law Game, and the Gap is Immense

Recovery or not, dispersion is a permanent feature of venture capital.

For almost every vintage, the net IRR at the 90th percentile exceeds 20%, while the 75th percentile is still below 15.5%. The distance from being in the "top quartile" to the "top decile" is enormous. Most funds are clustered in the "decent" tier.

And this gap compounds. For reference: 20% annualized growth over 10 years equals a 6.2x return, while 10% annualized growth over 10 years equals 2.6x.

Figure: Net IRR distribution by fund vintage; the 90th percentile generally exceeds 20%, showing a significant gap from the 75th percentile

Source: Carta Q1 2026 Report

Venture capital isn't just the asset class with the highest returns; it's also the one with the highest dispersion.

Translation for LPs: Manager selection isn't one of many inputs; it is the input. Indexing the entire asset class gets you the median, and the median VC fund is, at best, a slow, illiquid 2.6x return.

The Middle Tier is Being Squeezed Out

The final piece, perhaps the most structural, and a recurring theme in my recent articles: capital is concentrating.

Figure: Capital is concentrating towards top-tier funds

Source: Carta Q1 2026 Report

Funds larger than $100 million captured 57% of all VC fundraising in 2025. Eight years ago, that number was 31%. Most newly formed funds are still small sub-$25 million funds, but the share absorbed by large funds grows every year.

Figure: Small funds under $25 million still account for the majority in number, but total fundraising volume is skewed towards large funds

Source: Carta Q1 2026 Report

This is a barbell structure. Mega-funds raise capital based on their balance sheets and brands. Truly differentiated micro-funds raise capital based on niche strategies. The undifferentiated middle tier is where fundraising goes to die. Casual VC managers are heading back. The crossover capital and generalist funds that flooded into private tech at the 2021 peak are retreating back to their core businesses.

Overall fundraising is stabilizing (Carta recorded 86 new funds and $3.9 billion in Q1, the strongest start since 2022), but "stabilizing" doesn't mean "distributed equally." This money is flowing towards those with a track record and away from everyone else.

My Key Takeaways

Boiled down to the simplest form, there are four points:

Paper is back, cash is not. TVPI is a story about sentiment; DPI is the only number LPs can actually spend.

The power law is alive and well. A few funds win big, most are mediocre, and the distance between them is the entire game.

Liquidity is the next dominant logic. Funds that can generate distributions, not just report paper gains, will win the next fundraising round.

The trend of capital concentration. Either be big, or be sharp; don't get stuck in the middle.

Carta doesn't break out crypto separately, so none of the above are "our" numbers. But the physical laws are the same, only louder in crypto.

Crypto VC is more dispersed, more concentrated, and more reflexive than the broader market. Casual participants fled first and fastest here. This suits me: in the pre-seed stage, the only lasting advantage is picking the right person before the crowd shows up. The data consistently confirms this; the median is a trap, the action is in the tails.

Alright, now for the rest of the June crypto and web3 funding roundup :)

Top Ten Crypto Fundraising Rounds in June

Securitize | SPAC Merger / PIPE | RWA Tokenization | ~$400M | 2026-06-26

This tokenization leader backed by BlackRock is set to list on the NYSE (ticker SECZ) via a merger with Cantor Equity Partners II, with gross proceeds of approximately $400 million, including an oversubscribed $225 million PIPE. Serving clients like Apollo, KKR, Hamilton Lane, and VanEck, Securitize is also building a tokenized securities platform for the NYSE itself. This is a public listing, not a private VC round, so it's starred at the top, but it's also the cleanest milestone for "tokenization going mainstream" this year. The deal is expected to close around July 1st.

Digital Asset | Strategic Round | Institutional Infrastructure / L1 | $355M | 2026-06-11

a16z crypto led the month's de facto largest crypto fundraise at a $2 billion valuation, with a follow-on list that reads like a Wall Street roll call: Citadel Securities, an Abu Dhabi Investment Authority entity, BNP Paribas, HSBC, Apollo, Optiver, Tradeweb, CME Ventures, S&P Global, SBI, SoFi, Coinbase Ventures, and Polychain. Digital Asset builds Canton, a privacy-enhanced public L1 blockchain for regulated capital markets, which already supports the issuance of approximately $6 trillion in tokenized assets, with users including JPMorgan, DTCC, and Visa. If you need a data point for "TradFi choosing its rails," this is it.

Morpho | Strategic Round | DeFi Lending | $175M | 2026-06-09

Co-led by Paradigm, Ribbit Capital, and a16z crypto, with participation from Apollo Funds, Circle's venture arm, and VanEck, at a valuation of up to $2 billion. Reportedly the largest DeFi round ever. Morpho allows anyone to "build their own Aave," creating customizable lending markets. Its client list (Coinbase, Kraken, Anchorage, Galaxy) explains why institutional capital is suddenly willing to underwrite on-chain credit. The thesis "DeFi is the backend of fintech" just got funded.

Fomo | Series B | Consumer Trading | $75M | 2026-06-22

Index Ventures led a $75 million round at a $550 million valuation, with participation from Union Square Ventures and angels including Mark Pincus, Kevin Hartz, and Humam Sakhnini. Fomo is a non-custodial social trading app that abstracts away wallets, gas, and bridging. It takes about 30 seconds to onboard, fund, and buy a token, layered with leaderboards and social feeds. With over 625,000 users and $4 billion in trading volume, it's the most prominent consumer fundraising round this month.