I saw his notebook as he paced slowly down the back row at the Wyoming Blockchain Symposium. Just two columns: “Risks worth betting on” and “Noisy but empty”—no stickers or brand logos. One word emerged in the former: Web3.
The subdued, quiet scene captures the more profound change taking place in venture capital. Money is moving once more in 2025—not to speculative hype, but to technologies that are now demonstrating strength, maturity, and a more obvious legal path forward. After being a joke during the post-NFT crash, Web3 is now being presented as a legitimate infrastructure layer, and funding is flowing in line with this.
| Key Factors Behind VC Investment in Web3 (2025) | Details |
|---|---|
| Total VC Crypto Investment Forecast | Over $18 billion in 2025 (Pitchbook) |
| Regulatory Drivers | GENIUS Act, Clarity Act, stablecoin legislation |
| Tech Synergies | Convergence of Web3 with AI and fintech |
| Focus Areas | Infrastructure, DeFi, tokenization, RWAs |
| Shift in VC Behavior | Fewer but larger deals, return of generalist VCs |
| Institutional Entry Points | IPOs (e.g. Circle), ETFs, acquisitions |
| Passive Income Appeal | Staking, yield-bearing tokens attracting capital |
Web3 startups raised $9.6 billion in just the second quarter. That’s impressive on its own. The quieter point, however, is more telling: the quantity of deals fell to a level not seen in five years. Larger checks, fewer companies. This space is now defined by consolidation rather than fragmentation.
This includes the institutional muscle finally being flexed. Family offices and sovereign funds start to pay attention when BlackRock begins listing cryptocurrency exchange-traded funds (ETFs) and Circle’s initial public offering (IPO) yields fivefold gains. These are revenue engines with compliance built in, not meme plays. Additionally, compliance—once a barrier to legacy finance—is now a selling point. Although they didn’t make headlines, the GENIUS Act and Clarity Act opened up discussions in a hundred investment committee rooms.
The renewed interest is technological in nature as well as regulatory. A variety of new products now prefer Web3 as their back-end. The stack that Web3 enables is subtly integrating itself into workflows that go far beyond tokens and speculation, whether it is DePIN networks supporting supply chain data or AI agents requiring verifiable proof-of-origin.
Additionally, passive returns are appealing. The concept of tokens that produce actual, protocol-based income is remarkably successful in attracting investors in a market that is adjusting to low interest rates and rising capital costs. DeFi protocols that made it through the purge in 2022 and 2023 now appear to be sustainable engines that provide tangible return on investment (ROI) as digital utilities rather than just yield farms.
Meanwhile, generalist venture capitalists, who were previously irritated by the giddy enthusiasm of 2021, are returning to the market with metrics taken from fintech and SaaS. They are posing more challenging queries: Is there a steady stream of income? Is the product available right now? Do users continue to use the site? For founders who have long advocated for substance over flash, this pressure has been especially helpful.
Last autumn, I sat down with a product lead in Lisbon who, like a proud chef presenting a dish, showed me their on-chain retention dashboard. He declared, “We no longer chase token prices.” “We strive to retain users.” The new venture capitalists are only interested in that. His dashboard conveyed an unexpectedly clear narrative that resonated with his most recent Series A lead.
This change is structural in part. VCs are giving crypto equity a higher priority than volatile coin strategies as the number of new token launches declines and IPO pathways reopen. Additionally, they are making significant investments in infrastructure, including custody, compliance tools, real-world asset tokenization platforms, and enterprise-grade permissioned chains.
During the Waveup investor roundtable in Dubai, I observed that at least one partner from each fund was present at the DAO governance calls. In 2021, that would never have occurred. Venture now realizes that decentralization is more than just a feature; if misinterpreted, it can be a liability. They are influencing protocol governance in ways that are both self-serving and strategic by getting involved early. The game is smarter.
Another trend that is on the rise is tokenization. Carbon credits, real estate, and U.S. Treasury bonds that were previously secured by legacy rails are now mirrored on-chain with fractional access and more transparent audit trails. VCs are investing in the data, oracles, custody, and market layers beneath the platforms that make this possible.
As of July 2025, two-thirds of all Web3 VC capital is being directed toward top-down wagers, such as RWAs connected to the debt and real estate markets or IPO-ready exchanges, while a third has gone to bottom-up primitives, such as perpetuals and prediction markets. Because it distributes risk among both experimental and legally sanctioned assets, this diversified approach is remarkably effective.
It’s interesting to note that a lot of this is going on beneath the surface. Today’s deals are frequently not disclosed until after the sale, in contrast to the fervent press cycles of 2021. Funds are afraid of overexposure, while startups are afraid of volatility. More chess than roulette is involved.
The rate of maturation is the most notable feature. Crypto has built on top of pre-existing systems, in contrast to AI, which needed decades of infrastructure to reach escape velocity. It began with a networked, programmable base rather than from scratch. Because of this, its evolution has felt erratic but remarkably resilient.
During a panel at ETHDenver in March, I found myself paused on this. Even their most conservative LPs were now inquiring about how to enter “compliant Web3,” according to an experienced investor. I wrote the phrase down. It was strangely detailed. Above all, that specificity could be a sign of a new cycle.
2025 is about alignment—between policy and product, between old money and new rails, between speculation and infrastructure—if 2021 was about marketing and 2023 was about survival. And because of this alignment, venture capital, which was previously dubious, is not only coming back, but also increasing its investment.
