Crypto Venture Capital Insights for H1 2026: The Seed is Dead, Control Must Rise

In the first half of 2026, crypto venture capital rounds plummeted by 78%, with capital shifting from broad investments to controlling mature sectors. Traditional institutions accounted for over half of the investments, marking the death of seed rounds and the rise of stablecoins and prediction markets.

Written by: Starbase Accelerator

Report Overview

On July 14, 2026, Tiger Research released "The Age of Control: Crypto Venture Capital in H1 2026" in collaboration with the Web3 asset data platform RootData. The report systematically outlines the structural changes in the crypto venture capital market based on 9,416 investment transactions from 2018 to the first half of 2026. The report explores several dimensions:

• Restructuring of the VC landscape: which institutions survived, which disappeared, and how capital is concentrating at the top;
• Migration of financing rounds: the collapse of seed rounds and the deep logic of capital siphoning in later rounds;
• Traditional finance's entry: the evolution of institutional capital from "testing the waters" to "controlling the market";
• Differentiation in sectors: the rise of payment stablecoins and prediction markets, while GameFi and NFTs retreat;
• Shift in investment paradigms: from "broad net betting" to "infrastructure control".

From "Broad Net" to "Control": The Paradigm Shift in Crypto VC

In the first half of 2026, the crypto venture capital market presented a highly contradictory landscape: total financing reached $13.3 billion, nearly matching the $13.2 billion for the entire year of 2024, yet the number of financing rounds was only 435, a staggering 78% drop from the peak of 1,978 rounds in 2022. This is not merely a market contraction, but a profound structural reconstruction—capital is shifting from "broad net" to "precise control". Analysis of the 9,416 investment transactions since 2018 by Tiger Research and RootData reveals a clear trend: the market is polarizing.

On one end are a few large crypto-native VCs (such as a16z crypto, Paradigm, Pantera Capital), which concentrate resources to become lead investors, raising due diligence thresholds, and vying for board seats and governance influence;

On the other end are exchange-based VCs (Coinbase Ventures, OKX Ventures, YZi Labs, etc.), which use liquidity and marketing support as competitive weapons, dominating follow-on investments. Coinbase Ventures topped the participation rounds with 140 transactions from 2024 to the first half of 2026, followed closely by OKX Ventures with 94 transactions, and YZi Labs (formerly Binance Labs) with 92 transactions.

Medium-sized VCs caught in the middle face the fate of being rapidly squeezed out of the market. Institutions like AU21 Capital, LD Capital, and Shima Capital, which adhered to a "speed-first, diversified portfolio" strategy during the last bull market, saw their transaction numbers plummet by as much as 98.9%, losing nearly all market influence. Their failure is not coincidental—when the market shifted from "narrative-driven" to "revenue-validated", funds lacking differentiated advantages were naturally eliminated.

Collapse of Seed Rounds and Capital Siphoning in Later Rounds

In the first half of 2026, there were only 81 seed round transactions, an 88% drop from 694 in 2022, with their share of total transactions falling from 35.3% in 2022 to 18.7%. Two signals lie behind this: first, investors are clearly avoiding early projects with unverified business models; second, the number of new projects genuinely needing seed round financing is decreasing.

In stark contrast is the concentration of capital in later rounds. Series A and beyond accounted for 75.2% of total investment, with Series A total financing ($745 million) exceeding that of seed rounds ($423 million). The average transaction size has seen a stepwise increase: seed rounds at $5.4 million, Series A at $22.4 million, Series C at $127 million, and Series E at $202 million. Transactions over $100 million reached 32 in the first half of 2026, accounting for 7.4% of all transactions, a significant rise from 1.1% in 2024; the average transaction size surged from $11.7 million in 2024 to $47.4 million, nearly quadrupling.

Traditional Financial Institutions' Entry and Control

Traditional financial institutions participated in 54.5% of investment transactions in the first half of 2026, a high level maintained since first surpassing half (53.9%) in 2021. Their participation methods are also changing—no longer merely early exploratory follow-ons, but direct large-scale investments in mature projects.

A typical case is a16z leading a $355 million round for Digital Asset (the developer of Canton Network), where core institutional players like BNP Paribas, HSBC, S&P Global, and Hanwha Investment & Securities chose to invest directly rather than through venture capital subsidiaries. These institutions no longer judge based on "TGE timelines" or "token economics", but on auditable revenue structures and necessary regulatory licenses.

Dramatic Changes in Sector Landscape: Who is Rising, Who is Falling

After the approval of the Bitcoin spot ETF in 2024, the infrastructure sector once accounted for 50.9% of total investment, but by the first half of 2026, it plummeted to 14.8%. The four dominant sectors now are: payment and stablecoins (25.3%), centralized exchanges (18.2%), and prediction markets (17.5%).

The death spiral of GameFi: the number of transactions in the gaming sector plummeted from 141 in 2024 to just 5 in the first half of 2026, a 96% drop; financing fell from $758.6 million to $44.8 million. The early GameFi model overly relied on token issuance to create financial returns rather than sustainable gaming experiences. Once new user growth slows, token devaluation and user attrition reinforce each other, creating a "death spiral". User traffic data, once seen as a key indicator in due diligence, has thus lost reliability, and capital has effectively closed the gates on this sector.

The retreat of NFTs and social entertainment: NFT transactions fell from 27 to 2, with financing dropping from $114.9 million to $14.7 million; social entertainment transactions decreased from 74 to 11, with financing falling from $512.1 million to $70.1 million.

The "silent concentration" of DeFi: transaction numbers decreased by 71%, but total investment only dropped by about 34%. The average transaction size rose from $4.5 million in 2024 to $10.4 million in the first half of 2026. Morpho's $175 million token round completed on June 9, 2026 (led by a16z crypto, Paradigm, and Ribbit Capital) alone accounted for 17.7% of total DeFi investment in the first half of the year, indicating a clear market concentration.

Explosive growth of payment and stablecoins: this sector's financing surged from $14.39 million in 2024 to $2.85 billion in the first half of 2026, an increase of about 20 times. However, it is important to note that this growth is primarily driven by a few large M&A deals—Mastercard's $1.8 billion acquisition of BVNK and Payward (the parent company of Kraken)'s $600 million acquisition of Reap together accounted for about 84% of the total investment in this sector for the first half of the year. After acquiring Bridge, Stripe further collaborated with Paradigm to build the stablecoin payment-specific chain Tempo, successfully launching the mainnet in March 2026; Bridge co-founder Zach Abrams subsequently became the interim head of the Open USD (OUSD) global alliance stablecoin project, which has over 140 participating companies. By acquiring both its own platform and industry standard alliances, Stripe marks a shift in the competition for stablecoin infrastructure from company-level acquisitions to the battle for global standard-setting authority.

CEX's "self-investment": investment in the CEX sector rose from 3.0% in 2024 to 18.2%, but M&A accounted for 75.5% of total investment in this sector from 2024 to the first half of 2026, with this proportion increasing from 58.8% in 2024 to 78.9% in 2025. Representative transactions include: Naver's acquisition of Dunamu shares (pending regulatory approval), Coinbase's $2.9 billion acquisition of Deribit, Kraken's $1.5 billion acquisition of NinjaTrader, and the $2 billion strategic investment by Abu Dhabi's sovereign wealth fund MGX in Binance. Large exchanges are playing dual roles as both "investee" and "strategic investor".

The rise of prediction markets: after the CFTC officially approved the compliant operation of prediction markets in May 2025, this sector entered the mainstream institutional view. Kalshi's cumulative trading volume surpassed $100 billion in June 2026, completing a $1 billion round led by Paradigm and another $1 billion round led by Coatue; Polymarket received approximately $1.6 billion in investment commitments from the Intercontinental Exchange (ICE). This sector is forming a pattern of "dual oligopoly + repeated institutional bets".

The "silent rise" of custodians: financing increased from $2.04 million in 2024 to $317.1 million in the first half of 2026, a 15-fold increase. Anchorage's single round strategic investment of $100 million accounted for about one-third of total investment in this sector for the first half of the year. The demand for institutions to directly hold crypto assets has spurred rigid growth in compliant custody infrastructure.

Conclusion: From "Betting" to "Control"

The report reveals a fundamental shift: the focus of crypto investment has moved from "sowing short-term seeds" to "controlling infrastructure and protocols".

Before the approval of the Bitcoin spot ETF in 2024 and the improvement of the regulatory environment, the crypto market was a field of "indiscriminate betting", dominated by numerous small, narrative-driven investments. This strategy ultimately led to the collapse of the GameFi and NFT sectors, as well as the elimination of VCs adhering to this strategy.

Today's capital no longer pursues short-term bets but aims for long-term control over investment targets and on-chain infrastructure. It concentrates large amounts of capital on a few established targets with auditable revenue structures and regulatory licenses, or directly acquires equity to control the infrastructure itself.

In the past, investments in early projects were signals released by VCs to the market—"smart money" entering would drive token prices up or attract retail investors to participate early. But today, structural capital that directly acquires infrastructure and obtains licenses no longer conveys any followable signals to retail investors. Retail investors' reactions to VC investment news are weakening, fundamentally because the market capital itself has undergone structural changes.

Retail investors now also need to assess potential investments as cautiously as VCs. The old betting strategy for retail investors and in the "Age of Control", capital no longer bets on seeds but directly acquires the fruits.