2025 Crypto VC Funding May Lag 2021-2022: JPMorgan

In a report led by Managing Director Nikolaos Panigirtzoglou, the analysts attribute the anticipated growth in VC funding to factors such as clearer regulations and a favorable business environment.

At the same time, they highlight several challenges for investors. For instance, competition from major institutions like BlackRock and Franklin Templeton is reducing the market share available to VCs. These large institutions are primarily focused on areas like tokenization, stablecoins, and decentralized finance (DeFi).

Platforms like Echo are also emerging, allowing founders to raise capital directly from communities and small investors. This alternative approach enables projects to bypass large token sales to VCs and secure funding through other means.

Another challenge is the high interest rate environment, which makes VC funding less attractive compared to other investment options. Additionally, the growing popularity of crypto ETFs is pulling investor attention away from early-stage startups. 

Since ETFs provide an easier way to gain exposure to crypto without directly funding new projects, they are reducing the pool of capital available for venture capital investments.

JPMorgan analysts predict that investors will favor projects with strong user adoption over those that emphasize metrics like total value locked (TVL) and tokenomics.

Previously, PitchBook co-founder Robert Le predicted that crypto VC funding would reach $18 billion in 2025. In comparison, crypto companies received $11-12 billion in funding in 2024.