Crypto venture capital rebounded in the second quarter of 2026, with $5.683 billion invested across 384 financings involving private crypto and blockchain companies, according to Galaxy Research. Funding rose 31% from the prior quarter, while deal count increased 10%. The report said the recovery was driven mainly by a rise in late-stage financings, with capital growing faster than transaction volume, a sign that larger rounds absorbed more of the money.
At the same time, fundraising for new crypto venture vehicles remained difficult. About $3.9 billion was allocated to five new crypto-focused VC funds in Q2, the smallest quarterly count of new funds since the fourth quarter of 2019. Galaxy Research framed that split as a key feature of the current market: capital is still being deployed, but raising fresh funds is much harder.
Investment pace improved in the first half, though still slightly below 2025
For the first six months of 2026, venture investors deployed $10.018 billion into the crypto sector across 744 deals. Annualized, that pace implies about $20 billion for the full year, slightly below the $20.3 billion recorded in 2025, but still above most of the levels seen during the 2023-2024 bear market period.
Galaxy Research also noted that the historical relationship between Bitcoin prices and crypto startup funding has weakened compared with 2017 and 2021. Bitcoin reached new highs at the end of 2025 without a clean, synchronized move in venture activity, the report said. By Q2 2026, however, both Bitcoin and venture deployment were moving higher at the same time.
Late-stage companies took most of the dollars, while seed activity stayed meaningful by count
By stage, about 78% of invested capital in Q2 went to late-stage companies, while 22% went to younger businesses. In the report’s headline breakdown, late-stage transactions accounted for about 77% of total funding, early-stage rounds made up about 15%, and seed and pre-seed deals represented the remaining share.
Measured by transaction count, pre-seed’s share edged up to 21% of all deals, while late-stage financings rose to 26% of completed transactions. Galaxy Research said it tracks pre-seed share as one way to watch startup formation and investor risk appetite. Pre-seed activity still matters in absolute terms, but the growing share of late-stage transactions points to a maturing market.
Valuations fell from late-2025 highs, but median deal size hit about $4.9 million
The report said valuations for venture-backed crypto companies reached a record in the fourth quarter of 2025, above the peak set in 2021. Those valuations then fell sharply in the first and second quarters of 2026. Over the same period, valuations in the broader non-crypto VC market declined only modestly.
Even with that pullback, transaction size moved the other way. Galaxy Research said the median size of a crypto venture deal in Q2 2026 reached about $4.9 million, a record high. It also cautioned that valuation coverage is limited: only about 16% of second-quarter deals included valuation data, and the available sample skews heavily toward later-stage transactions.
Trading, exchanges, investing and lending remained the biggest funding category
By sector, trading, exchanges, investing and lending companies attracted the largest share of crypto venture capital in the quarter, raising about $3.523 billion. That was roughly three-fifths of all capital invested in Q2. DeFi ranked second at about $478 million, followed by privacy and security, tokenization, AI, infrastructure, Web3/NFT/DAO/metaverse/gaming, and payments and rewards.
Galaxy Research said the quarter looked unusually concentrated when viewed in dollar terms alone. The picture was more varied when measured by the number of deals. Trading and finance-related companies still ranked near the top, but other categories also kept a meaningful presence in transaction count. On a longer time series, the report said trading and financial businesses have consistently taken an important share of venture activity without accounting for every deal.
The report also broke down funding and deal count by both sector and stage to show where money is actually going and which categories are still building activity through seed and early-stage rounds. Galaxy Research said that, similar to previous quarters, Q2 still showed reasonably healthy dispersion across sectors and financing stages. Looking at the stage mix inside each category also helps show relative maturity: some sectors carry a larger late-stage share, while others are still dominated by earlier rounds.
Companies founded in 2018 raised the most capital, while younger startups led by deal count
Grouped by founding year, startups established in 2018 attracted the most venture capital in Q2 2026, at about $2 billion. Companies founded in 2020 ranked second with about $1.1 billion, followed by the 2014 and 2021 cohorts.
Deal count told a different story. Younger companies led on that measure, with the 2025, 2022 and 2023 founding cohorts topping the list.
The US remained the center of crypto startup financing
Geographically, 73.5% of invested capital in the quarter went to companies headquartered in the United States. The US also led by number of transactions, accounting for 39.1% of the 384 representative deals tracked in the report.
Galaxy Research said the distribution is somewhat more dispersed when viewed by deal count than by dollars invested, but the US remains clearly ahead, with other regions also contributing a meaningful number of financings. In its conclusion, the report said that US dominance strengthened again in Q2 2026.
Fundraising stayed difficult, with only five new funds in the quarter
While investment activity improved, fundraising conditions for crypto venture firms remained challenging. Galaxy Research said the macro backdrop, together with the disruption seen in crypto markets in 2022 and 2023, continues to weigh on some allocators, making them less willing to commit capital at levels comparable to early 2021 or 2022.
The report also said rising attention to artificial intelligence has diverted some focus that might previously have gone to crypto. Spot ETFs and digital asset treasury companies are also competing with venture capital for institutional money. In Q2 2026, total allocations to crypto-focused venture funds came to about $3.9 billion across five funds, the lowest quarterly new-fund count since the third quarter of 2019.
On an annualized basis, the first-half fundraising pace points to roughly $10 billion for 2026, above the $8.75 billion raised in 2025. Average fund size rose to about $377.98 million, and median fund size climbed to about $80 million.
Galaxy Research sees a healthier market than prior bear lows, but pressure remains on fund managers
In its closing assessment, Galaxy Research said venture activity bounced back after a first-quarter retreat and remains stronger than the lows seen earlier in the bear market. The report repeated that startup funding used to track liquid crypto asset prices more closely during the 2017 and 2021 bull periods, but that relationship has weakened. In Q2 2026, both Bitcoin and venture activity moved higher, with invested capital growing faster than the number of deals.
Late-stage companies still dominated fundraising totals. About 78% of second-quarter capital went to late-stage businesses, which the report said reflects a more mature industry and a larger set of scaled companies with revenue. Earlier rounds still made up most completed transactions, with pre-seed accounting for about 21% of all deals.
Galaxy Research also said spot ETPs and digital asset treasury companies may be drawing away some of the attention and capital that otherwise could have gone to venture funds and startups. The report said large allocator interest in spot Bitcoin exchange-traded products suggests that some institutions prefer liquid instruments over early-stage VC exposure. Fund managers therefore remain in a difficult environment. Galaxy Research added that greater policy clarity could revive allocator interest, though it also said the chances of market structure legislation passing this year are low.
The original report included Galaxy Digital disclaimers and conflict-of-interest disclosures, which were not reproduced in full in the TechFlow version. The views cited are from Galaxy Research and do not constitute investment advice.
