Only 153 Venture Capital Firms Invested in July: Is the Crypto VC Industry Facing a 'Mass Extinction'?

Global capital remains abundant, but the focus of allocation and the list of managers are narrowing.

Written by: ChandlerZ, Foresight News

As of July 31, CryptoRank recorded 153 different venture capital firms participating in crypto financing in July, marking the lowest monthly level since November 2020. This figure counts the number of firms that participated in at least one disclosed crypto financing, adjusted for duplicates, and does not imply that only 153 venture capital firms remain in the market.

The number peaked at 1,177 firms in 2022 and has since decreased by approximately 87%. In the second quarter of 2026, 651 firms participated in crypto financing, down about 75% from 2,564 firms in the second quarter of 2022.

CryptoRank data shows that this metric reached 395 firms in March 2026, briefly rebounding to 314 in May, before dropping to 244 in June.

CryptoRank Monthly Unique Investor Count for 2026

On the other hand, the reduction in crypto venture capital firms is occurring during a phase of global venture capital expansion. In the second quarter of 2026, global venture capital reached $227.4 billion, involving 8,440 transactions, the second-highest quarterly total on record; the total investment for the first half of the year reached $560.4 billion, only lower than the same period in 2021. Significant funding for AI companies such as Anthropic, Prometheus, and DeepSeek is a major driving factor.

According to KPMG, as of the end of the second quarter, global venture capital funds raised approximately $98.8 billion this year, involving 727 funds. Among them, 19 funds raised over $1 billion, collectively absorbing $53.2 billion, accounting for more than half of the total. The number of transactions remains weak, with large funds primarily flowing to AI and mature companies with validated business models.

Due to this heat, the capital and transaction volume in the crypto market have both declined. Galaxy Research reports that in the first quarter of 2026, crypto and blockchain startups completed 355 financing rounds, raising approximately $4 billion, representing declines of 16% and about 50%, respectively, quarter-over-quarter. Only 8 new crypto venture funds completed fundraising during the quarter, totaling about $1.1 billion, the lowest since the third quarter of 2020.

Galaxy attributes the fundraising difficulties to several factors, including historical return pressures caused by industry turmoil from 2022 to 2023, the macro environment, competition from AI for limited partner funds, and the liquidity provided by spot crypto ETFs and digital asset treasury companies. Global capital remains abundant, but the focus of allocation and the list of managers are narrowing.

$11.778 Billion Raised in the First 7 Months, May Contributed One-Third

As of July 31, CryptoRank's public dashboard recorded that crypto projects completed 481 financing rounds in the first 7 months of 2026, disclosing a total amount of approximately $11.778 billion.

CryptoRank Monthly Crypto Financing Amount and Rounds for 2026

May saw a peak with $3.889 billion and 87 financing rounds, accounting for about 33% of the total amount in the first 7 months. April only had $698 million and 71 rounds, while May's financing amount increased to 5.6 times that of the previous month, with the number of rounds increasing by only about 23%. Projects of similar scale can correspond to completely different total financing amounts, indicating that a few large transactions still dominate the monthly curve.

March and May combined absorbed approximately $6.088 billion, accounting for about 52% of the total for the year. Financing amounts fell back to $1.479 billion in June and $1.473 billion in July, while the number of public rounds decreased from 61 to 39.

Exchanges, Prediction Markets, and Payments Absorb 53% of Funds

According to CryptoRank's project category breakdown, exchanges, prediction markets, and payments ranked as the top three in financing amounts for the year, receiving $2.490 billion, $1.897 billion, and $1.861 billion, respectively, totaling approximately $6.247 billion, accounting for 53% of the total financing in the first 7 months. AI ranks fourth with $1.305 billion.

Interestingly, DeFi ranked first with 78 rounds but only raised about $654 million; payments and AI completed 73 and 65 rounds, respectively. High-frequency early-stage financing still exists, with capital more concentrated in exchanges, prediction markets, and other tracks capable of accommodating large later-stage transactions.

The financing stage further amplifies this disparity, with only 20 rounds recorded for Series C and later rounds, absorbing about $3.333 billion; the seed stage, including Pre-Seed and expansion rounds, totaled 156 rounds, disclosing an amount of approximately $750 million. Strategic financing completed 127 rounds, amounting to about $2.718 billion. The rounds are primarily distributed in early and strategic financing, with the high points in amounts driven by a few later-stage projects.

The amount of mergers and acquisitions in the crypto industry increased from $272 million in the fourth quarter of 2025 to $7.23 billion in the second quarter of 2026, expanding more than 26 times in six months. This amount is not included in the previously mentioned $11.778 billion financing metric, but it indicates that capital is flowing to companies that have already formed businesses and assets through mergers and acquisitions.

The list of investment institutions also shows a trend of concentration. Coinbase Ventures participated in 34 financing rounds this year, while Animoca Brands, a16z crypto, and Tether participated in 19, 18, and 17 rounds, respectively. The repeated involvement of a single institution increases the number of transactions but does not increase the unique investor metric, explaining the coexistence of ongoing financing activities and a decreasing total number of active institutions.

Top Funds Can Still Raise Capital, While Long-Tail Institutions Reduce Project Choices

Dragonfly completed its fourth fund of $650 million in February, and a16z crypto announced the raising of $2.2 billion for its fifth fund in June. Galaxy Research reported that in the first quarter of 2026, only 8 new crypto venture funds completed fundraising, totaling about $1.1 billion, the lowest since the third quarter of 2020. Top managers can still secure large capital, but the list of institutions capable of sustainable fundraising is shrinking.

Dragonfly partner Rob Hadick previously described in an interview with Fortune magazine that the crypto venture capital industry is experiencing a 'mass extinction.' The number of active institutions has shrunk by nearly 90% from its peak, diverging from the simultaneous expansion of global venture capital, indicating that this contraction is more about a shift in capital allocation. The AI track and secondary market tools have simultaneously diverted capital that would have originally flowed to primary crypto projects, a trend that is unlikely to reverse in the short term.

However, early-stage projects can still maintain a certain number of transaction frequencies, but the scale of each transaction is limited; large funds are concentrated in exchanges, prediction markets, and a few later-stage tracks, as well as in merger transactions. This means that the crypto primary market has not disappeared, but the risk appetite of capital has clearly contracted, preferring to flow to targets with validated business and asset accumulation.

Top funds complete large fundraising, while many small and medium institutions no longer participate in new financing rounds. This pattern has a tangible impact on startup teams, reducing the number of potential investors, narrowing the negotiation space for terms, and raising the standards for project selection. The decline in the number of institutions, capital scale, and transaction frequency is not necessarily a negative signal, but it does mean that the industry threshold is rising, with stricter requirements for project quality, capital efficiency, and exit paths than before.

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