In my last published report (here), I looked at 2024 market trends correlated to VC capital deployment and startup fundraising rounds, coming from data captured from my deal flow database. As it has been quite a turbulent start of the year, let's review the data processed thus far to see what indicators and trends lay ahead.
To start, I want to quickly touch on market performance (Bitcoin) to date and how that has affected VC capital deployment; inadvertently impacting the duration and ability for startups to close their rounds.
So far in 2025, we have seen Bitcoin hit an all-time-high, then descend back down to prices close to November 2024 around the announcement of Trump's election. Prices have been heavily impacted by US governmental policies/strategies, macro-economic uncertainty, institutional activity, and overall market sentiment.
What's interesting is that despite uncertainty around geo-politics and macro-economics, which drew prices down; institutional adoption has been strong and growing. Based on a recent report published by Paradigm, TradFi adoption is on a positive trajectory, where more than 2/3 of TradFi companies are investigating into DeFi solutions (particularly stablecoins, tokenised assets, and DEXs). Reputable companies like Fidelity Digital Assts, VanEck, CME Group, CNY Mellon, and BlackRock, have all made pubic announcement and a stance on adopting crypto as part of their investment strategies.
Unfortunately, despite the positive sentiment from TradFi players; its a different story for crypto VC funds, where small to mid. size funds are highly vulnerable to market performance, with many writing fewer tickets or pausing on capital deployment all together, waiting for better stability and positive signals from the market. To add on, many VC funds have been unsuccessful or struggled to raise new funds themselves due to poor historic fund performance (ROI) as well as lowered LP appetite on crypto investments. A weakened market sentiment directly impacts many startups both on token launch plans as well as ability to raise capital.
Based on data, despite lagging markets, a majority of startups looking to raise this quarter were still optimistic to be able to stick to their original launch plans of Q1 2025, with Q2 2025 being the next popular timing.
Out of the 277 deals (startups with open rounds) processed; the leading category is DeFi at 33.2% (6.1% increase compared to 2024), followed by Infrastructure/Tooling at 31% (8.6% decrease compared to 2024), then 20.6% in Consumer Applications (includes gaming, SocialFi, etc), 9.4% in DePIN, and lastly 5.8% in Community/Culture (Memecoins, DAOs, etc).
Given the promise for clearer and favourable regulations, as well as the evident adoption of crypto from institutional players; it is with no surprise that startups are focusing on building better DeFi products, where there is a significant TAM (total addressable market).
In looking at the sub-verticals, it is clear that AI remains to be a key leading category as integrating AI has now become a necessity for companies to remain competitive and relevant.
Although there was a clear uptick of AI Agent related deals towards the end of 2024, this narrative has steadily declined as the hype and excitement around AI related Memecoins (and Memecoins in general) dropped together with market prices.
Two areas that are worth highlighting are the Bera and Monad ecosystems, as well as infrastructure solutions around cross-chain liquidity (including middleware and bridges), which have both increased in deal volume compared to last year. This showcases the excitement around the mainnet launch of Bera and Monad, together with the clear necessity and demand to improve DeFi operations by providing the fundamental rails to increase user experience on different protocols.