Crypto Venture Capital Sees a Surge: $4.6 Billion Raised in Q3

Crypto venture capital investments reached $4.65 billion in the third quarter, marking the second-highest level of activity since the FTX exchange collapsed in late 2022 and decimated investment in the sector.

Alex Thorn, the head of research at Galaxy Digital, mentioned in a report on Monday that Q3’s venture investments represented a remarkable 290% increase from the previous quarter and was the largest volume since Q1, which saw $4.8 billion in investments.

“Despite remaining below 2021-2022 bull market levels, venture activity remains active and healthy overall. Sectors like stablecoins, AI, blockchain infrastructure, and trading continue to draw deals and dollars, and pre-seed activity remains consistent.”

Venture capital funding for blockchain-focused startups has reached the second-highest level of the year. Source: Galaxy Digital

The resurgence in investment comes after a significant withdrawal from the crypto venture capital scene following the unearthing of FTX’s massive fraud, which resulted in the exchange’s bankruptcy.

Limited Deals Garnered Majority of Investment

In Q3, a total of 414 venture deals took place, with only seven deals accounting for half of the capital raised this quarter. These included Revolut, a financial technology firm, securing $1 billion, the crypto exchange Kraken receiving $500 million, and the US-based crypto bank Erebor accruing $250 million.

Interestingly, established companies, particularly those founded in 2018, received most of the capital, whereas firms established in 2024 held the majority of deals.

“Pre-seed deal count as a percentage has trended down consistently as the overall industry has matured.”

“With crypto being adopted by established traditional players, and a large cohort of venture-backed firms having found market fit, it’s increasingly likely that the golden era of pre-seed crypto venture investing has passed.”

VC Activity Stalls as ETFs Capture Interest

Historically, bull markets in 2017 and 2021 saw a strong correlation between VC activity and crypto asset prices. However, Thorn observed that the last two years have demonstrated a more subdued VC activity even as asset prices have risen.

In previous cycles, capital invested in cryptocurrency startups has followed the Bitcoin price. Source: Galaxy Digital

“The venture stagnation is due to several factors: a decrease in interest in popular crypto VC sectors like gaming, NFTs, and Web3; the rising competition for investment capital from AI startups; and increasing interest rates discouraging venture allocators more broadly.”

Spot exchange-traded products and digital asset treasury companies are also likely challenging investor interest in crypto. High-profile investments in Bitcoin ETPs by significant investors such as pension funds and hedge funds imply that some investors may prefer gaining exposure through larger, liquid vehicles instead of opting for early-stage VC investments.

Macro trends continue presenting obstacles for allocators, yet Thorn anticipates that changes in the regulatory environment could lead to a renewed interest from investors in the sector.

US Dominates Crypto VC Activity

In the past quarter, a notable 47% of the total capital was infused into companies based in the United States, with the United Kingdom receiving 28% and Singapore accounting for 3.8%. Furthermore, the US represented 40% of completed deals, with Singapore following at 7.3%, and the UK at 6.8%.

The US has historically accounted for the most deals and capital invested, a trend that has continued into Q3 2025. Source: Galaxy Digital

Thorn remarked that despite a previously challenging regulatory landscape, the US has historically accounted for the highest number of deals and investment capital, expecting this trend to persist under the crypto-friendly Trump Administration.

“We foresee increased US dominance, especially with the GENIUS Act now official, and if Congress can advance a crypto market structure bill, traditional US financial services firms will be drawn into the sector more earnestly.”

Cointelegraph covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.