坚守一级市场的VC，手裡還有多少錢？

Original | Odaily Planet Daily (@OdailyChina)

Author｜Azuma (@azuma_eth)

Who knows the current state of the crypto primary market best? Naturally, it's the VCs still active in the market.

In recent days, several investors from Pantera Capital, Crucible Capital, Blockworks, and Varys Capital have engaged in a small-scale discussion on X regarding the state of the industry's primary market. Although there are some differences in their views on the market situation, their debate might help us gain a closer understanding of the primary market conditions.

Counter-Intuitive Reality: VCs Are Not Short of Funds, but Investment-Worthy Opportunities Are Scarce

On the evening of April 20, Crucible Capital Partner and GP Meltem Demirors published a short post on X explaining why the number of financing deals in the crypto industry is significantly decreasing.

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 evident, which is why this VC has begun shifting its focus beyond the crypto market. 

The venture capital business in the crypto market has been developing for ten years, but the directions that have truly been validated and can generate "VC-level returns" are actually quite limited — stablecoins/payments, exchanges, and financial products. For VC investors and first-line founders, this industry now has fewer breakout hits, longer cycles, and therefore demands higher industry knowledge, resilience, and long-termism, raising the bar from seed round to Series A.

Although there are still some "generational" founders in the industry building category-defining companies (a VC's job is to find them and win the opportunity to invest), the reality is that there is a clear gap between "the stories founders are telling" and "what VCs can reasonably invest in."

After Demirors' post was published, it sparked discussions among many fellow VCs on the topic.

Several investors replied in agreement with Demirors' views. Among them, Blockworks co-founder Mippo summarized, agreeing with Demirors that the current primary market issue is a shortage of excellent founders and projects. On the VC side, there is actually sufficient capital for investment — but at the same time, early-stage VC funds are in surplus, while VC funds focusing on later-stage growth are still notably insufficient.

Partial Disagreement: Where Exactly Is the Capital Concentrated?

Regarding whether VC capital is concentrated in the early discovery phase or the later growth phase, Pantera Capital investor Mason Nystrom and Varys Capital venture capital head Tom Dunleavy hold completely opposite views, leading to a heated debate between them.

Dunleavy first stated that he disagrees with Mippo's view of "abundant early-stage funds, insufficient later-stage funds": "I would hold the completely opposite view. There is actually a lot of mid-to-late-stage crypto VC capital right now — mostly from recent and currently fundraising funds like Paradigm, Multicoin, Pantera, Dragonfly, etc., not to mention traditional VCs partially involved in the crypto market. In contrast, industry-focused seed rounds and earlier-stage funds are insufficient... As long as you haven't completely shifted to AI, there are actually many interesting projects to invest in."

However, Nystrom, an insider at one of the later-stage VCs Dunleavy mentioned (Pantera), strongly refuted Dunleavy's claim. He believes that current VC capital in the industry is more concentrated in the early stage, rather than in Series A, Series B, or later.

Nystrom did the math: if a fund wants to focus on Series A or Series B financing, it needs to invest in at least 20-25 projects, each with a significant amount of capital — roughly $15 million for Series A and $40 million for Series B — based on this, a fund focusing on Series A needs at least $300 million in assets under management (AUM), while a fund focusing on Series B needs at least $800 million. This doesn't even account for reserve funds, which typically require holding 10% - 50% of cash on hand. How many funds in the industry meet this requirement?

So the reality is that there may be at least 50 funds with AUM less than $100 million in the industry, but simultaneously, there are probably only about 15 funds with AUM exceeding $400 million. The number of major players truly capable of participating in Series B and later rounds is extremely small. There might indeed be more Series B and later-stage capital in areas like fintech (e.g., stablecoins), but these projects have long since "graduated" into the traditional VC system and can no longer be simply regarded as crypto market projects.

But Dunleavy was not convinced. In his response, he posted Galaxy's Q1 primary market financing report, mentioning that in Q1 of this year, the total number of industry financing deals fell by 49% year-over-year, but the average deal size increased by 76% (approximately $36 million) — total financing for seed rounds and earlier was only $268 million; Series A totaled $370 million; Series B was $1.1 billion; and later rounds reached a staggering $2.72 billion (mainly from Kalshi and Polymarket).

Dunleavy then countered, stating that data shows in 2025, 50%+ of industry investments flowed to later stages (an all-time high), and in 2026, it has already reached 80%+.

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

Nystrom then responded again, pointing out that in the data Dunleavy presented, the vast majority of later-stage investments actually come from fintech-related "graduated" projects, which have already entered the purview of traditional VCs and secured funding, and therefore should no longer be counted within the industry.

Nystrom continued to argue, building on Dunleavy's conclusion that "only 5-6 funds can invest in Series A and beyond, but dozens can invest in seed rounds": "This means if you can't convince one of those six, you're basically out of luck; but in the early stage, as long as one out of dozens of funds is willing to invest, you can survive. The 'accessibility' of these two is completely unequal."

Furthermore, funds like Pantera Capital that have the capacity to invest in mid-to-late stages actually also invest in seed rounds, but the reverse is not true. Coupled with the fact that more and more VCs are transitioning to liquid funds, the actual scale of capital truly available for mid-to-late-stage investments in the industry is much smaller than the numbers suggest.

More Than "Is There Money," the Real Question Is "Where Is the Money, and Can You Get It"

In summary, neither side convinced the other, but based on the direct confrontation between two frontline investors, we can further glimpse the reality of the crypto primary market — "whether there is money" does not seem to be the core issue of the primary market; "where the money is and whether you can get it" is the real question.

From surface-level data, industry capital remains abundant, even showing high concentration in later rounds; but from a practical standpoint, both VCs and entrepreneurs are facing a more "structurally tightening" market — early-stage funds appear scattered but competition is fierce, while mid-to-late-stage funds seem ample but have extremely high barriers to entry. This also means the rules of the game in the primary market are changing. The era of completing the financing cycle based solely on narratives, traffic, and short-term returns is rapidly fading. It is being replaced by a financing environment that relies more on actual business progress, long-term capabilities, and deterministic growth paths.

For VCs, this is a cycle of "fewer moves, heavier judgment"; for entrepreneurs, it is a survival test that requires crossing longer cycles and higher thresholds.