Crypto VCs Favor Later-Stage Deals, Missing Early-Stage Returns

Varun Datta of Truth Ventures argues that the current trend among crypto venture capital firms to focus on later‑stage investments is more a product of market consensus than disciplined strategy. He notes that proven companies captured 57% of the capital deployed in the last quarter, leaving a significant portion of funding away from early‑stage founders.

Shift Toward Later‑Stage Funding

Datta observes that many crypto VCs have retreated to later‑stage deals, treating this shift as a prudent move. However, he suggests this may overlook the higher upside potential found in the founding‑stage gap.

Founding‑Stage Gap as Return Driver

The analyst highlights that the most substantial returns are likely to emerge from early‑stage opportunities that are currently under‑funded. By concentrating capital on later‑stage companies, VCs may be missing out on these higher‑growth prospects.

Three Indicators to Watch

Datta outlines three factors investors should monitor when evaluating early‑stage crypto projects, though the specific criteria are not detailed in the source.