Feb’26: The State of Venture Fund Performance & Crypto VC

Hello

Welcome to the February Deal Flow Digest, including every crypto / web3 funding round we tracked last month, as well as the ALL the deals, and the recent hackathon/demo day results (in the links).

In February, AngelList published their Fund Benchmarks Report 2025 (data current as of January 1, 2026), covering 1,000+ early-stage funds. And Galaxy Digital Research released their Q4 2025 Crypto & Blockchain Venture Capital Report, capping off a year that saw a significant rebound in crypto VC activity. I think these two reports paint a pretty comprehensive picture of where venture (and crypto venture specifically) sits heading into 2026.

AngelList data shows a structural break at the 2020 vintage. Median TVPI surged between Q4 2020 and Q1 2022, then flatlined. The 2021 valuation wave lifted multiple vintages simultaneously, and funds launched 2021–2023 largely missed that uplift, stagnating near 1.0x TVPI.

The 2021 vintage is the weakest cohort… In fact, AngelList notes the median 2021 fund may lose money, something Cambridge Associates hasn’t recorded since the 2000 vintage. 2024 could represent a better entry point, but it’s early.

Interesting that a portfolio that invested $1 in every AngelList fund would have achieved a 20.6% IRR, 2.08x TVPI, and 0.19x DPI net to LPs by end of 2025. That very low DPI number is a reminder that realized returns remain thin across the VC asset class.

Galaxy’s data tells a complementary story from the crypto-specific lens. The headline number is that Crypto VCs invested $20 billion across 1,660 deals in 2025… more than double 2023’s figure. Q4 alone saw $8.5B deployed across 425 deals, an 84% jump from Q3 and the strongest quarter since Q2 2022.

But the headline numbers mask heavy concentration. In Q4, eleven deals over $100M accounted for ~85% of capital deployed. Revolut ($3B), Touareg Group ($1B), and Kraken ($800M) dominated. According to Galaxy’s Alex Thorn: “The golden era of pre-seed crypto venture investing has likely passed” as pre-seed share has declined consistently as the industry matures. In fact, 56% of Q4 capital went to later-stage companies, reflecting an industry that’s consolidating around established players rather than spreading bets across early-stage experiments.

The category mix is shifting too. Trading, exchange, and lending companies captured the most capital in 2025, followed by stablecoins, AI, and blockchain infrastructure. The previously hot sectors (e.g. gaming, NFTs, Web3 consumer) have faded.

On the fundraising side, crypto-focused VC funds raised $8.75B in 2025, the most since 2022, with average fund size hitting $167M and a median of $46M.

One tension worth flagging: Galaxy notes that spot Bitcoin ETPs and digital asset treasury companies may be competing directly with crypto VC for allocator interest. Some large institutional investors (pensions, endowments, hedge funds) are gaining crypto exposure through liquid, regulated products rather than committing to early-stage funds. This “barbell” dynamic (BTC ETFs on one end, memecoins on the other) continues to squeeze the middle where most crypto VC operates. Note, that while I agree that pre-seed investing in crypto VC is not as easy as it once was, there are still tremendous opportunities if you’re selective.

The AngelList operational data confirms what many of us already suspected: emerging managers follow wildly different playbooks, and many of them work.

• GP commits range from 1% (25th percentile) to 12% (75th percentile). The median is 4%, well above the typical 1–4% legal minimum. About 60% of AngelList funds have GP commits, and ~20% use cashless commits via management fee diversion.

• $20M is where institutional capital enters. Below that line, only 2–16% of funds are audited. Above it, 50–100% are. Firms represent 49% of commitments for sub-$20M funds but jump to 66% above that mark. University and philanthropic endowments only show up as anchor LPs in $20M+ funds.

• LP concentration is notable: for a typical fund, the top 5 LPs represent ~50% of commitments. At the 75th percentile, the largest single LP accounts for 48% of capital, and the top 5 represent 92%.

• Portfolio construction varies widely: the median fund holds 16 companies (IQR: 9–34) with a median seed check of $50K, reflecting AngelList’s smaller fund sizes. Strategy alignment should be visible in portfolio size, check sizing, and deployment pace.

• Fundraising timelines range from 2 to 28 months between first and last close (25th to 75th percentile). The typical fund closes ~51% of capital in its first close. Capital deployment is fast: the typical 2024 fund has already deployed ~48% of committed capital into startups, with emerging managers calling about a third of capital per year for the first three years.

• For GPs raising successor funds: Fund II is typically 2.6x larger than Fund I, with 29% of capital from returning LPs. Fund III is 1.9x larger than Fund II, with 45% returning capital. But the median commitment from returning investors actually decreased in absolute terms.. meaning GPs grow by finding new LPs, not by upsizing existing ones.

For GPs: Align operations with your strategy, not the average. A concentrated 10-company portfolio requires different operational targets than a diversified 30+ company approach. In crypto specifically, the capital is flowing back… but it’s flowing toward later-stage, proven companies. If you’re running an early-stage crypto fund, the competitive dynamics are tougher: fewer mega-rounds to mark up against, and LPs increasingly able to get crypto exposure through liquid alternatives like ETFs.

For LPs: Diversify by vintage year. Macro conditions dominate short-term performance across all funds, the 2021 cohort shows that. Galaxy’s data reinforces this: the correlation between Bitcoin price and VC activity that held in prior cycles has broken down, so even a crypto bull market doesn’t guarantee strong VC vintages. Use AngelList’s benchmarks during diligence: a GP claiming a concentrated strategy shouldn’t have 35+ companies. And pay close attention to DPI, paper markups remain high, but cash-on-cash returns are still slim for most vintages.

The 2025 data overall is cautiously encouraging. Crypto VC capital is returning at scale, 2024-vintage funds are outperforming the stagnant 2021–2023 cohorts, and the regulatory environment, particularly in the US with the GENIUS Act now law, is creating new investable categories in stablecoins, tokenization, and DeFi-TradFi convergence. Whether this translates to actual realized returns is the question that matters most, and one we’ll be tracking closely.

Flying Tulip | Public token sale | DeFi | $206,000,000 | 2026-02-23
Flying Tulip dominated February’s fundraising with a $206M public token sale. The yield aggregation protocol pools deposits into automated yield strategies on Ethereum, reflecting surging appetite for passive DeFi yield products and positioning it as one of the most well-capitalized yield protocols in the market.

Whop | Strategic | Web3 | $200,000,000 | 2026-02-25
Whop raised $200M from Tether at a $1.6B valuation. The social commerce platform enables creators to build storefronts and sell digital goods, with Tether’s investment signaling aggressive diversification into Web3 commerce infrastructure while validating Whop’s position as a leading creator economy platform..

Anchorage Digital | Strategic | Banking | $100,000,000 | 2026-02-05
Anchorage Digital received a $100M strategic equity investment from Tether—the stablecoin giant’s second major bet of the month. As a federally chartered digital asset bank, Anchorage provides institutional custody, trading, and crypto financial infrastructure, strengthening ties between the world’s largest stablecoin issuer and a leading regulated custodian.

Novig | Series B | Prediction Market | $75,000,000 | 2026-02-18
Novig raised $75M in a Series B led by Pantera Capital at a $500M valuation. The commission-free, peer-to-peer sports prediction market eliminates the house edge by enabling direct user-to-user trading, positioning it as a well-funded challenger to legacy sportsbooks amid a broader prediction market boom.

TRM Labs | Series C | Crypto Intelligence | $70,000,000 | 2026-02-04
TRM Labs raised $70M Series C led by Blockchain Capital at a $1B valuation. With Goldman Sachs, Citi Ventures, and Brevan Howard in the syndicate, the blockchain intelligence company’s raise underscores institutional demand for compliance and surveillance infrastructure as crypto adoption scales.

Jupiter | Strategic | DeFi | $35,000,000 | 2026-02-01
Jupiter secured a $35M strategic investment from ParaFi Capital to expand its full-stack Solana ecosystem. Best known as Solana’s dominant DEX aggregator, Jupiter is rapidly expanding into prediction markets and other verticals, reinforcing its ambitions to become Solana’s all-in-one DeFi hub.

Bluff | Strategic | Prediction Market | $21,000,000 | 2026-02-03
Bluff raised $21M led by 1kx to build a social-first betting and entertainment platform combining sportsbook, iGaming, prediction markets, and creator-led events. Its focus on instant onboarding, real-time on-chain settlement, and social gameplay reflects the growing convergence of prediction markets and social entertainment.

Opinion | Series A | Prediction Market | $20,000,000 | 2026-02-04
Opinion raised $20M backed by Hack VC, Jump Crypto, and Primitive Ventures to build a prediction exchange for macroeconomic data and news. By enabling direct trading of economic predictions as standardized assets, Opinion targets a novel niche highlighting continued VC conviction in prediction market infrastructure.

Relay Protocol | Series B | Infrastructure | $17,000,000 | 2026-02-05
Relay Protocol raised $17M co-led by Archetype Ventures and USV to scale its decentralized multichain interoperability protocol. Relay enables fast, low-cost cross-chain transfers by relaying transaction intents and liquidity across blockchains, with USV’s backing positioning it as core plumbing for the multi-chain future.

Kresus | (Round not specified) | Wallet | $13,000,000 | 2026-02-18
Kresus raised $13M from Hanwha Investment and Securities, one of South Korea’s largest financial conglomerates. The Web3 mobile wallet offers a seedless, user-friendly experience for managing crypto and NFTs, reflecting growing TradFi interest in consumer-grade Web3 wallets in the active Korean market.

Click to see all of February’s funding rounds here:

VCs are continuing to announce their new raises.

• Dragonfly Fund IV $650M | Feb 2026
  Dragonfly closed its fourth crypto venture fund at $650 million. The firm said it will continue backing major crypto infrastructure and onchain finance themes, including stablecoins and tokenized real-world assets.

• DBA Fund II $62M | Feb 2026
  DBA announced its second venture fund at roughly $62 million, focused on early-stage crypto-native startups. Some coverage reported a slightly higher figure, but the announcement marked a new crypto venture vehicle for the firm.

• Paradigm New Fund up to $1.5B | Feb 2026
  Paradigm was reported to be preparing a new fund of up to $1.5 billion. The fund would expand the firm’s scope beyond crypto into adjacent areas like AI and robotics while maintaining crypto exposure.

As a reminder, if you are interested in learning more about Bankless Ventures Fund II, please fill out this form and we will be in touch!

Upcoming

xStocks Hackathon EthCC: Market Open | March 31–April 2
Cannes, Provence-Alpes-Côte d’Azur (in-person). $75k in prizes.

ETHGlobal Cannes 2026 | April 3–5
Cannes, France (in-person). $100k+ in prizes.

Ongoing

MoveFWD Phase II (Alkimi x Sui) | Jan 27 – Mar 29, 2026
Online. $150K prize pool focused on building on Sui across multiple tracks.

Polkadot Hub Hackathon 2026 | Feb 15 – Mar 24, 2026
Online. $30K prize pool for Web3 builders creating apps on Polkadot Hub

Finished

HackMoney 2026 (ETHGlobal) | Jan 30 – Feb 11, 2026
Online (async). $2,000,000+ in prizes (per ETHGlobal’s “async hackathons” framing, which includes HackMoney). Winners announced here.

Pump.Fun Build in Public Hackathon | Jan 28 - Feb 25, 2026
$3 million in total funding, distributed across 12 winners, with $250,000 in investment per project. Winners to be announced.

Upcoming

Helika × Avalanche Accelerator Demo Day | Mar 9, 2026
San Francisco, USA (in-person). Demo day for the first cohort of Avalanche game studios from the Helika accelerator, with studio showcases and a preview of Helika’s publishing stack.

Anchorage Digital Demo Day @ ETHDenver | Feb 17, 2026
Denver, USA (in-person). Invite-only showcase for early-stage protocol teams building crypto infrastructure. Winner announced here.

mtnDAO Demo Day | Feb 25, 2026
Salt Lake City, USA / livestream. Solana and mtnDAO’s first demo day, featuring early-stage teams from the summit pitching builders and investors.

Nitro | Open (apply by Mar 14, 2026)
New York City + remote. Web3 accelerator open to founders building on any chain; accepted teams receive $500k each, with one month in person in NYC and two months remote before demo day.

Alliance ALL17 | Open (apply by Mar 25, 2026)
New York City + remote. Crypto accelerator for early-stage to later-stage teams; Alliance says accepted startups get $500k funding, with a 2-week in-person NYC onboarding followed by an 8-week remote program.

That’s a wrap for February!

Thank you and good luck out there.

Ben Lakoff, CFA
https://twitter.com/benlakoff