Recent trends in cryptocurrency treasury deals, known as DATs, are drawing significant capital away from traditional startup fundraising, raising concerns among venture capitalists and entrepreneurs. In 2025, the number of traditional crypto startup VC rounds, excluding DATs and token sales, fell sharply to 856 from 1,933 in 2024, marking a 56% decline. Total funding for these rounds also decreased from $8.13 billion in January–August 2024 to $8.05 billion in 2025, largely due to a major $2 billion raise by Binance in March. Excluding this, traditional funding rounds saw a 26% year-over-year drop to $6.05 billion.
Venture capitalists argue that DATs are gaining popularity due to their liquidity benefits and instant market valuation. When a DAT trades at a premium to its market net asset value, it allows funds to raise more capital, purchase more crypto, and boost NAV per share, creating a flywheel effect. However, investors are now more cautious about fundamentals, particularly in mNAV multiples for Bitcoin- and altcoin-focused DATs.
The broader venture market is shifting towards projects with clear revenue models and value capture. VCs like Michael Bucella of Neoclassic Capital and Ed Roman of Hack VC highlight protocols like Hyperliquid, which return substantial revenue to token holders, as setting new benchmarks. This transition from speculative ventures to revenue-generating models is seen as a healthy market correction. Cosmo Jiang of Pantera Capital describes the decline in “fundamentally valueless tokens” as a necessary industry reset.
Beyond DATs, broader market challenges are limiting early-stage funding. The post-2021 funding slump has reduced the number of potential backers for early-stage deals. Jed Breed of Breed VC notes decreased interest from limited partners in smaller VCs, leading to a shortage of capital for early-stage rounds. A “Series A crunch” is emerging due to limited leadership options and conservative token listing practices on exchanges.
Despite these challenges, the quality of deal flow has improved, with more teams presenting viable products and revenue models. Areas like DePINs and zero-knowledge infrastructure are underfunded yet promising, while DeFi protocols with proven revenue models are gaining attention. VCs anticipate a shakeout in the DAT space, with smaller funds consolidating and only a few major players remaining.
Overall, while crypto treasury deals are not necessarily reducing total startup funding, they are redirecting capital in ways that raise questions about the long-term implications for innovation and venture diversity.
