"Arms Race" During Bear Market: Why Did Six VCs Raise Over $6 Billion?
- Key Takeaway: Despite the ongoing crypto bear market, top venture capital firms such as Haun Ventures and a16z have collectively raised over $6 billion for counter-cyclical deployment, with a focus on next-generation on-chain financial infrastructure like stablecoins and asset tokenization, while also increasing bets in AI-related sectors. Meanwhile, small and medium-sized VCs face a tough landscape of fundraising difficulties and exit challenges, exacerbating the market's Matthew effect.
- Key Elements:
- Haun Ventures and a16z announced the completion of $1 billion and $2.2 billion fundraises in May, with the latter establishing its fifth crypto fund; institutions like Dragonfly and Paradigm have collectively raised over $6 billion in the past three months.
- Top VCs' counter-cyclical strategy centers on financial infrastructure with proven real-world demand, such as stablecoins, RWA (Real World Assets), prediction markets, and on-chain payments, shifting investment logic from sentiment-driven to long-term infrastructure development.
- Small and medium-sized VCs face increasing survival pressure due to altcoin liquidity drought, valuation declines, and exit difficulties. Most are choosing to scale back, pivot, or exit the market, creating a clear divergence from top institutions.
- The structural advantages of top VCs include resource monopolization, coverage of the full investment cycle, greater room for error, and brand bargaining power, further solidifying their dominance in the primary market.
- Beyond crypto finance, Paradigm and Haun Ventures have explicitly increased their focus on AI and robotics, believing that the characteristics of crypto networks can re-emerge as foundational infrastructure in the agent economy.
Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
The cryptocurrency bear market persists, but some highly significant moves have already emerged 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. $500 million each will be allocated to early-stage and later-stage funds, primarily targeting startups in the cryptocurrency and blockchain sectors over the next 2 to 3 years, while also expanding into intersecting tracks like AI Agents, fintech, and alternative assets.
Just one day later, a16z officially announced that its fifth cryptocurrency fund, Crypto Fund 5, had completed fundraising, securing $2.2 billion in committed capital. The fund will continue to delve deep into the cryptocurrency market, focusing on the parts most easily overlooked during cyclical rotations yet most capable of creating long-term value, aiming to transform the next generation of infrastructure into products people use every day.
Pulling the timeline back further, you'll find this is no coincidence but rather a "collective consensus" among top-tier VCs.
In February this year, Dragonfly's Fund IV completed a $650 million raise; late February, multiple media outlets reported Paradigm was seeking to raise up to $1.5 billion for its next fund; in March, ParaFi officially announced a $125 million fund close; in late April, sources revealed Blockchain Capital was raising $700 million for two of its funds... Within less than three months, these six VCs alone had quietly amassed over $6 billion in dry powder.
More critically, this capital was not raised during the market's hottest period, but during a bear market phase characterized by altcoin liquidity droughts, declining primary market valuations, and persistently low industry sentiment. As a16z partner Chris Dixon noted, "We're in a relatively quiet phase." This is not a follow-up charge driven by bull market euphoria, but a classic counter-cyclical deployment.
The Primary Market Heading Towards Divergence
Focusing solely on the $6 billion fundraising figure easily creates the illusion that "the primary market is recovering," but the reality is far more complex. Looking at the survival conditions of top-tier VCs versus small and medium-sized VCs, the primary market is showing a clear trend of divergence.
For most small and medium-sized VCs, this cycle is proving much tougher than imagined. Due to the persistent weakness of altcoins (largely missing out on the entire bull run) coupled with tightened secondary market liquidity, exit channels for funds are severely blocked. Paper gains often gradually shrink or even turn negative amid lengthy unlock periods. Below-par investment returns directly lead to decreased LP confidence, making fundraising for new funds increasingly difficult.
Consequently, we see that most small and medium-sized VCs are forced into a passive contraction during the bear market: some choose to shrink fund sizes and reduce investment frequency; others pivot to become pure secondary market funds; and some simply exit the market entirely. Many small and medium-sized VCs that enjoyed high exposure during the last bull market have now faded into obscurity.
In stark contrast are those top-tier VCs still aggressively raising capital. While their investment pace has also slowed with the market downturn, their dominant role in the primary market is actually strengthening thanks to their structural advantages.
These structural advantages are manifold: First, top-tier VCs often possess stronger resource monopolies, allowing them to more effectively capture rare high-quality projects (typical examples include a16z and Paradigm backing Kalshi, Dragonfly and ParaFi backing Polymarket, and Blockchain Capital investing in Coinbase and Circle); Second, top-tier VCs can cover a more complete investment cycle, from early stages like pre-seed and seed to later stages like Series A and B, providing more windows for topping up investments or amplifying returns; Third, top-tier VCs have greater room for trial and error, as larger AUM allows them to tolerate relatively higher failure rates and bet on longer-term narratives; Fourth, the brand effect of top-tier VCs translates to stronger bargaining power, often securing better terms than small and medium-sized VCs even in the same funding round.
This disparity in structural advantages ultimately leads to market divergence, with the Matthew Effect becoming increasingly pronounced – while in a bull market, small and medium-sized VCs might achieve a turnaround through a few lottery-like bets, this trend only intensifies during a bear market cycle.
What is this $6 Billion Looking At?
According to disclosures from these six VCs, the newly raised $6 billion will be deployed across the following tracks and directions.
- Dragonfly: Bullish on the trend of crypto financialization, highlighting areas like stablecoins, prediction markets, Agent payments, on-chain privacy, and real-world asset tokenization;
- Paradigm: Expanding beyond crypto into AI, robotics, and other frontier technology fields;
- ParaFi: Stablecoins, asset tokenization, institutional-grade on-chain financial products;
- Blockchain Capital: Focusing on early and growth-stage cryptocurrency startups;
- Haun Ventures: Bullish on a new generation of financial infrastructure, including stablecoins, asset tokenization, prediction markets, and the Agent economy;
- a16z: Mentioning financial infrastructure like stablecoins, DeFi, prediction markets, asset tokenization, while also believing that in the era of the AI explosion, the inherent properties of crypto networks can still solve software transparency and verifiability issues.
Putting the public statements of these six VCs together reveals that while there are still some differences in focus among different VCs, the overall direction has clearly converged.
The most central consensus undoubtedly revolves around a new generation of on-chain financial infrastructure represented by stablecoins, real-world asset tokenization (RWA), prediction markets, and on-chain payments. Whether it's Haun Ventures, a16z, Dragonfly, or ParaFi, these keywords are repeatedly mentioned in the directions of their new funds. To some extent, this signals a shift in the investment logic of the crypto industry. Compared to the sentiment-driven bets of the previous cycle, this cycle's top-tier VCs place greater value on infrastructure projects that have preliminarily validated real demand and have the potential to attract traditional financial flows over the long term.
Beyond this, top-tier VCs are also significantly increasing their bets on AI-related areas. Paradigm has explicitly stated it will allocate some funds to AI and robotics, while Haun Ventures and Dragonfly have also mentioned Agent-related directions. The reason behind this trend is not complicated. On one hand, AI has become the most certain main theme in the global tech industry, an area top VCs cannot afford to miss. On the other hand, the crypto industry is attempting to prove it is not merely an old narrative marginalized by the AI craze, but can serve as foundational infrastructure for the AI era – especially as the Agent economy gradually rises, the inherent openness, composability, and permissionless nature of crypto networks are starting to regain their value.
Raising in a Bear Market is Essentially Betting on the Next Cycle
For VCs, the bear market is often the phase that truly determines the future landscape.
While capital is easiest to raise during a bull market, project valuations and entry barriers are also typically higher. Only when market sentiment is low, liquidity is scarce, and industry narratives fail do opportunities for VCs to capture excess returns through judgment truly amplify.
Looking back at past cycles, bear markets don't kill truly quality projects; instead, they accelerate market cleansing, allowing "gold to shine faster." This is precisely why, even with current market sentiment still depressed, top-tier VCs continue to raise capital counter-cyclically.
Because what they are truly betting on has never been "the present," but rather, after the next cycle begins, who will become the new Circle, the new Hyperliquid, the new Polymarket.
