Galaxy Research finds crypto VC funding hit $5.68 billion despite record-low new fund formation

Crypto VC funding surged 31% in the second quarter of 2026, reaching $5.683 billion across 384 crypto and blockchain deals, according to Galaxy Research. The sharp increase in capital came as investors committed larger checks to later-stage companies, highlighting a market that is recovering but becoming increasingly selective about where venture dollars are deployed.

The disparity between capital and deal growth is important. Rather than pointing to a broad-based explosion in startup financing, the figures show that the quarter was largely powered by bigger financings, particularly at later-stage companies.

That makes the latest Crypto VC funding rebound different from the speculative surges associated with earlier crypto cycles. Galaxy Research found that later-stage companies captured about 78% of capital invested, while younger businesses accounted for the remaining 22%.

The first half of the year now stands at approximately $10.018 billion across 744 deals. If that pace continues through the remainder of 2026, annual investment would reach roughly $20.04 billion—slightly below the $20.3 billion recorded in 2025 but materially above the levels seen during much of the 2023-2024 downturn.

Galaxy Research’s Alex Thorn, its head of firmwide research and author of the report, has tracked the changing relationship between crypto markets and venture activity. The latest data shows that the historical connection between rising crypto prices and startup funding remains weaker than it was during the 2017 and 2021 cycles.

Later-stage startups capture the bulk of capital

The biggest story behind the Crypto VC funding rebound is not simply how much money entered the market, but where that money went.

Galaxy said later-stage companies attracted approximately 78% of Q2 capital. At the same time, early-stage activity remained substantial. Pre-seed deals represented about 21% of completed transactions, while pre-seed and seed deals combined accounted for 39.8% of deal activity.

The shift toward mature companies was also visible in deal sizes. The median crypto deal reached approximately $4.9 million, a new record in Galaxy’s dataset. However, the research firm cautioned that valuation information was available for only about 16% of Q2 deals and was heavily skewed toward later-stage transactions.

Company valuations themselves moved in the opposite direction. After reaching record highs in late 2025, crypto startup valuations declined sharply during the first two quarters of 2026.

That combination—larger median deals but lower valuations—suggests investors were still willing to commit significant sums, but were becoming more selective about the businesses receiving that capital.

Trading, exchange, investing and lending businesses emerged as the largest beneficiaries. The category attracted roughly $3.523 billion, or about three-fifths of total Q2 investment. DeFi followed with approximately $478 million, while privacy and security, tokenization, AI, infrastructure, Web3, gaming and payments also attracted meaningful investment.

U.S. startups dominate the funding landscape

Geography provided another striking feature of the quarter.

U.S.-headquartered companies captured 73.5% of represented capital in Q2, far ahead of the United Kingdom at 4% and France at 3.2%. The United States also accounted for 39.1% of the 384 deals, followed by the U.K. at 7% and Singapore at 5.7%.

The numbers reinforce the continued concentration of crypto venture activity in the United States. While deal participation remained geographically diverse, the largest pools of capital continued to gravitate toward U.S.-based companies.

For investors, the difference between capital share and deal share is particularly notable. U.S. companies represented less than half of all transactions but received nearly three-quarters of the capital, indicating that some of the quarter’s largest financings were concentrated among American businesses.

The trend also reflects the growing importance of mature financial and digital-asset infrastructure in the crypto market. Businesses operating in trading, exchanges, investing and lending accounted for the largest funding category, with more than 90% of the capital in that category going to later-stage companies.

New crypto funds struggle despite startup rebound

The Crypto VC funding revival becomes more complicated when venture-fund formation is considered.

Only five new crypto-focused venture funds raised capital during Q2, the lowest quarterly number since the third quarter of 2019, according to Galaxy. Those funds attracted approximately $3.9 billion.

That creates a striking divide: investors are putting billions into established crypto companies while showing considerably less enthusiasm for launching new venture funds.

Galaxy attributed the difficult fundraising environment to several factors, including the lingering impact of the 2022-2023 crypto market turmoil, broader macroeconomic conditions and competition from other investment opportunities. The report also pointed to growing interest in artificial intelligence, spot crypto exchange-traded products and digital-asset treasury companies as competing destinations for institutional capital.

Galaxy’s data shows that first-half 2026 fund formation would annualize to roughly $10 billion, above the $8.75 billion raised by crypto venture funds during all of 2025. Yet the number of newly established funds remains unusually low, meaning fewer vehicles are collecting substantially larger pools of capital.

That distinction could become increasingly important as institutional investors gain more ways to obtain crypto exposure without committing money to long-duration venture strategies.

The Q2 figures therefore paint a nuanced picture of Crypto VC funding. Capital is returning, but it is not returning indiscriminately. Investors are concentrating larger checks in mature companies, particularly those operating in trading and financial infrastructure, while new venture funds face a much tougher fundraising environment.

For crypto startups, the message is equally clear: capital remains available, but the market is demanding stronger businesses and larger-scale opportunities. The second quarter’s rebound may mark a healthier phase for crypto venture investing, but the distribution of that capital suggests the industry’s next growth cycle is being built around select companies rather than a broad rush into early-stage bets.