VC & Capital Formation in Digital Assets | Boston Blockchain Week 2026

Okay, I'm going to throw out a couple of stats. We're going to talk about VC and capital formation. I have index cards, markers, pens, and we're going to do this a little bit differently than most of these panels that I've seen in recent months, which have a tendency to get a little boring. So, uh, we wouldn't, uh, wouldn't be a panel unless I did some research and pulled out some stats to add value here. All right, snapshot as we enter this conversation.

2025, a bit of a recovery year. Galaxy has said that about 20 billion was invested in early stage crypto companies in 2025. Misari says it was even higher than that. 2026 is proving to be the year of bigger checks um but fewer deals. Uh deal count is down sharply.

The block thinks it's down by about 64% uh versus the same period last year. Dollars are holding up much better because the capital's concentrated in sort of these later stage lower risk uh deals. We'll talk about all this. Uh the medium deal size uh the median deal size so far has been about $4.5 million which is far higher than it was previously.

Uh annualized in 2026 we're seeing about 4 billion from Q one which is about 16 billion for this year. If we track that way this is versus the 20 billion from last year uh well below the average and very very much uh very far below the 2023 2024 years. Uh let's see what else do I have for good stats here. Uh new crypto formation is also pretty weak. Uh fewest new funds flowing into other funds since 2020.

Uh the Bitcoin VC correlation that has previously defined other cycles has weakened. Uh a lot of AI funds, a lot of ETFs, a lot of DATs. Um so I think we're going just going to talk about like where deals are right now, what's interesting, what's not. I'm going to do a little 90 second exercise with the crew up here.

So, apologies. Look at I even brought Arrington Capital pens. So, you guys each get a pen down.

I told you this would be fun, right?

This is fun.

Okay. And All right. And then you each get an index card. We're I didn't tell them I was doing this, so we're doing this a little bit on on the on the spot. I probably need to give some sort of disclaimer that well I'll do that after I you give you the exercise.

All right. So on this card you have about 90 seconds as long as it takes me to like thank Ian for putting me at crappy time frames on the agenda today um and the sponsors. But you have 90 seconds to write down something you must own, something that's too expensive to put money into right now and something you would absolutely pass on. And if you need category help, like we can keep it broad like stable coins or payments or cool stuff like crypto AI, but you know, you're gonna have to quickly explain yourselves. Um, I don't I'm just going to give like a broad disclaimer like nothing that is said, nothing that anyone says can or should be held against them as they write down their things.

Separately, Ian, thank you for hosting Boston Blockchain Week again. Uh, I think I've been coming to Boston Blockchain Week since Algarand and uh, Pillar VC owned this going back nine or 10 years ago. This is there a chance this is the 10th anniversary of Boston Blockchain Week or maybe that's next year.

It's your fifth.

So, I gave you the Boston Blockchain Week website five years ago. It's like an anniversary.

It's good. I like that.

Um, all right. Have you guys had enough time?

Do you need more thinking time?

We're good.

Okay. All right. So you guys each have we're going to go down the line. Matt, we'll start with you. Why don't you tell us what you must own, too expensive, and pass?

I did this in the context I I didn't do private companies because you can't get into those unless you have access. So I

We'll ask enough questions.

Um I said must own uh Bitcoin. I think just the it stands by itself in terms of its use case as a speculative store of value.

Okay, pass. Uh sorry, too expensive. We're going to go straight down your line. Ethereum uh stuck in the middle of being a a speculative asset, store of value and a uh you know platform.

Okay. And what are you passing on these days?

AI meets crypto layer ones.

Oo, no agentic payments for Okay. All right. We're gonna

Well, pro proagentic payments, but different ways to to play it.

Okay. Go ahead. Give us yours.

All right. So, I might have taken this slightly different than Matt. Um although maybe not based on where you ended up. must own for me it's it's um possibility for a new category of business to emerge out of it. Um, so the highly asymmetric bets, um, I'm early stage VC, so that's what we're always looking for.

Too expensive consensus bets. Generally, you want to do those three years before they became consensus. And then I'm with you on the, uh, uh, you know, AI PL, etc. But the one I put down is remittances to

just remittances to LATAM.

I must get a pitch on doing remittances to LATAM. Maybe I probably got one just while we've been sitting up here. It's too crowded. It's way too many. like other random c we're this is sorry this is picking on lat just the show and tell part we'll come back to it okay all right Bobby last one

um for Must I wrote crossber stable coins um we go up to series B so some of those are well in range and I think um when I think about what's working crypto stable coins is like front and center as something that's working really well um I also wrote AI economy for must own um so agree not investing in the AI chain. Um, but crypto has a nice intersection with the AI economy for agent payments and agent banking, all sorts of things. So, I think that's interesting. Too expensive. I wrote prediction markets and per two things that really work well.

Love them. Way too expensive right now, but great great sectors. And then I'm passing on new chains in general. I think we have enough block space. And I'm also passing on social trading, which is very hot right now, but I don't think there's longevity to that.

So,

so NFTs aren't coming back. There's so many things to pull apart in here.

Uh, not [laughter] quite NFTs, but like social networks where you tell people what you traded.

Okay. Notably, none of you mentioned any again Boston blockchain week in its somewhere between the 8 to 10th year here as we sit on this stage. Nobody inserted any sort of decentralized infra, permissionless infra. Is there anything that falls into that category? And I'm sort of going to the original ethos.

Then we'll come to modern time. The original ethos of blockchain where it was decentralized everything and anyone can participate and self-verify and the original promise of any blockchain. Nobody put decentralized permissionless infra. Just noting is there anything you actually any of you would do on that front?

I think the hardest thing from my perspective is a lot of these were great product ideas. You think about Filecoin, think about a bunch of these distributed cloud storage networks. They just didn't have the ability to pass the economic value back to the token holders. And I think a lot of that is less of a product issue and more of a regulatory issue. So I think there probably is a world with SEC rulemaking here where that whole category gets way more interesting.

But right now as a token holder, if you're just subordinated to the equity of the company, it's it's less compelling.

Okay. Fair. Anybody else? anything that you would do

because there's a lot that we wouldn't do.

I mean, look, I don't want to say I would never do infra, but but maybe kind of along the lines of what I was talking about a moment ago, we've built plenty of infra, right? So, I think Bobby said no more L1's, right? Uh couldn't agree more. We have we have enough. It's not that another one couldn't emerge, etc.

But I'm saying in aggregate um if you look at how the internet got going, the infra was always scrambling to try and keep up with demand. And in blockchain, in fact, I even heard it on the stage earlier. Oh, we need more infra and then the business will show up. Just not how things work. If you build something that people really want, they show up even if the infra sucks and then the infra catches up.

I think we just spent way too much time focused on infra and not on actual real business use cases.

Where were stable coins on your list? Nowhere. Not not like nowhere like I'm not interested in stable coins, but yeah. I mean, look, stable coins, if you want like I don't know if this is spicy or not. Um, but maybe it's along the lines of what we were talking about before the panel.

Um, I love stable coins, but I feel a little bit like they are to blockchain what email was to internet. It's the thing everyone's like, "Oh, now I get what this is for, but it isn't necessarily the thing that unlocks the massive massive value." What do you think the not anyone I know we're like going all over the place here. Uh what is does anyone think there's a non- consensus interesting take on stable coin that does unlock some massive value? Like is there anything in the stable coin front?

All right, we're beyond infra now we're into stables. Are stables just email or there is

remember email created a ton of value. It just wasn't

sure it wasn't Facebook.

Is is there anything akin to that that would that you could see being the 10x in your portfolio? I'm gonna turn to Bobby because I heard him say he really likes stable coins.

Yeah, I I kind of want to hear Cass Island's take as well. But um yeah, I think in the US we have a view of the way money moves that's like very privileged and like it all works really well here and it's kind of why I said like crossber stable coins specifically is a must own because that's where you expose the shortcomings of the global money system and where like digital money that moves permissionlessly instantly really shines. So when you think about like we try to invest in companies that are like 10x better than what has existed prior and you don't get that by offering like a new Venmo with stablecoin in the US but when you go cross border you actually really uh improve things on the an order of magnitude which is what we look for.

Yeah I mean we're I mean we're super bullish crossber stablecoin use cases. If you look at our portfolio of things that are growing the fastest it tends to be in service of sending dollars outside the United States. And you know, if you think about what's going to grow the stable coin market 10x, I think it this might be a little bit provocative, but I think you will start to see nation states fail as a result of stable coin adoption. You're going to see these high uh inflation regimes, dictatorships start to crumble because people have access at a retail level to hold dollars and just opt out of their local systems. So, I think you will see this profound kind of savings technology use case for stable coins.

Uh but obviously you got to get the stable coins to those geographies which is why I think you know these remittance companies are doing quite well right now just sending dollars cheaper.

How do you think those roll up or merge or who who are the winners there? Is it I'm the you know is it the the company that owns Guyana or Pakistan or whatever. Is that the the big winner or is there some you know bigger bigger winner that takes all those and eats their lunch? Well, if you take look at the Latin American market right now, it tends to actually be the the customer in the US that is sending the capital that is the more valuable customer that you can cross-ell on brokerage and savings and things like that. Uh the recipient of the payment is less monetizable.

They tend to be living paycheck to paycheck. So, I think there's a profit pool in the United States with an unders under underbanked community for sure uh with Latin America. The other profit pool that I think is fairly obvious here is the FX wholesale liquidity market. So if you think about just the the big banks uh and the money centers there, none of them are connected to stable coin rails yet. And so some of the the better performing companies in the stable coin space are just doing that fiat currency to stable coin exchange at massive scale.

So I think you'll eventually see the banks move into that sector. Also on stable coins, uh outside of just the customer or the kind of retail customers sending remittance payments, we're also seeing a lot of success in our portfolio for B2P B2B like stable coin payments across borders. So you got a multinational corporation that needs to move money uh to you know basically seed their accounts so they can have working capital in all these regions and stable coins are a great solution for those guys. So we're seeing traction there as well.

Anything to add on on the stable coin? I mean, uh, I'm I'm obviously in favor of stable coins. We have a number of stable coin bets in our portfolio. Um, I just don't think that's where the next like massive outcomes are. I think good outcomes are going to come out of there rather than massive outcomes because most of what we're doing with stable coins now are things that we could do before, but it's a little bit cheaper, a little bit faster, a little bit better.

Great. All for it. The banks are going to love it. They're going to they're going to, uh, be adopters of it, uh, like Matt said. Um, but that's not where you get sort of parallel law returns as an early stage investor.

Uh, shifting gears a little bit on the AI front, Matt. I know you were not doing a lot of it. I forget you both are going to have you're going to have to share. My shortterm memory is not the best. Uh, but your um the AI and crypto intersection to do or not do.

If you're not doing it, are you not doing it because it's something that your LPs don't want? For example, like we are mandated to be a decentralized web 3 fund. So we look at a lot of the AI stuffing stuff coming through. Fascinating stuff. Um we're not well equipped to due diligence much of it and you know but on the flip side there are these elements to it that make them really robust for web 3 use cases.

How do you think about that and why are you for or against or not specifically investing in it?

Yeah I think I think uh probably for all of us right our we have we have AI in our portfolio whether it's explicit or not right. So everybody's portfolio companies are are are using it to code faster um to solve problems etc etc. So you're you're kind of already have exposure to that. I think I'm probably where you guys are though Kelly with uh I don't want to go headtohead with like a dedicated AI fund who's been doing it for 10 years um has developed the thesis etc etc like it's just not where we add value or or where we play. So we've sort of steered away from that.

I think another thing I've observed is that for a lot of blockchain plus AI, um, it's the same old story again where as an industry, we've been great at sort of going into a room, defining a problem by ourselves, declaring ourselves to be the solution, and then going out and fundraising on that, right? And so I I I feel like for a lot of things I'm getting pitched, take Agentic Payments for example, uh I feel like it's it's as if someone started DoubleClick before search engine marketing was a thing and they say, "Well, we know exactly how search engine marketing is going to work, so we're going to build all this tooling for it." And it it's the wrong order, right? Um so anyway, there's there's an answer in there, I guess, to uh to be parsed out.

Yeah. Um, so we're very focused on the intersection of crypto and AI. Um, I think

just for Coin Fund has been educating us on the intersection of I mean our conversations with Jake on this go back many many years.

Yeah. So I'm going to hit on a couple ways that we slice this because I I agree there's a lot of stuff out there that is either out of scope or uninteresting. So the things that we find interesting, well first as uh you were saying Jake since 2022 our founder has been pioneering this thesis on decentralized training. Uh back then people thought it was genuinely impossible. Um and now we're seeing signs that we can train models in a decentralized fashion um and have them ownable by a community in a similar way to some of these permissionless protocols.

Um and that is proving to be possible at the same time where it's proving that the market really needs this. Uh open source AI is already kind of having its moment. Uh but there's kind of a business model problem there. Like if you who do you expect to fund the continued output of open source AI is the question. Um right now it's being subsidized by maybe like Nvidia is a big person who's subsidizing open AI.

Um but eventually you'll need a business model there where people offer their compute and train these models and you know Frontier Intelligence isn't just owned by like two super powerful uh private entities. So that's one thesis we're really excited about. And then um we're also starting to do work on decentralized inference. I think that's going to become important as well. um how can we do what we're good at to use crypto incentives to recruit compute from all over the world to serve these models once we have them.

Uh so another problem we're excited about. And then the last one is the AI economy that I was referencing which is um you know how do these agents interact with each other whether it's just like communication uh like message board type thing or like full commerce. Um so we're exploring all of these areas. Um, I think they're all quite interesting and potentially explosive. Um, the we're building the nth chain just so agents can live here.

A little bit less compelling, not seeing the the value ad, but that's how we slice up the space at Coin Fund.

I think the payment side of it is the most interesting to me. I think this is just a top level use case for a lot of the stable coin infrastructure that's been built out. Uh, so there's a financial services way to to do this. You have uh neo banks and net new banks that are coming out with the ability to actually onboard an agent as a customer. I think that's an interesting space.

Uh MPC wallet technologies evolving to contemplate uh agentic payments. So definitely a space that um I'm looking at more through the payments angle.

All right. Uh I realizing we only have 10 minutes left, so I'm going to rapid fire some of these things. Um let's The other thing that is happening is this shift towards further out on the spectrum. It's later deals. We see a lot of later deals.

I've think I've had separate conversations with almost all of you and many people about how we're seeing deals all the time. We're still deploying capital. It's less and less of the sort of wild crazy ideas that you used to get going back four, five, six years ago. And it's much more, you know, that's a nice little knob, not a crank or that's a lifestyle business, not like venture style return. So, if I were to give you something like there's a series A AI agent blockchain native neo bank that's raising at a $250 million post money valuation and it's got an awesome team.

It's like OpenAI and Stripe Pedigree founders. Um, the token is TBD, so we don't know if it's an equity or a token business. Are you passing, leading, following on? And then what's the one due diligence piece that makes you want to do or not do that on something like that. And again, mostly focused I'm mostly focused on the stage that that's at.

And I purposely made that very generic.

First round raising at $250 million valuation.

Let's call it like a seed. They took some angels already.

Yeah. I mean, I think that's I think that's kind of hard. Um,

you're laughing. That's not unreasonable. And you know, you've all seen these pitches in the past month,

but it's coming. It's coming down.

Yeah. I mean, I we tend to be very ownership focused, trying to own 10 to 15% of a a business at the inception check, and typically we're writing a 10 to 12 million initial check. So, um that might be a little hard for us.

Yep.

Yeah. We're not writing checks uh as big as Matt, but but same basic idea. Um so, yeah, it would be tough for us, too.

Uh for a seed, you said 250 million valuation.

Yep.

Um so, I'm assuming like no traction, just an idea.

There's like a little bit of traction. There's like a a spark there.

Yeah. Say yes.

I mean, I I'm out, but um [laughter] I think I can put a finer point on it just to say like we we now can look into the universe of opportunities and see companies that are raising at $250 million post money valuation and have like traction to show that like this business is working. So, uh I know you mentioned the founder pedigree was very high, but um yeah, we have businesses that are working and generating cash. So, why would we do that? Why would we pay that price for a seed round? Okay, just asking.

Yeah.

Uh, all right. Moving on. It's September of 2029. Your 2026 vintage VC fund only returned like half a point, right? So about less than half a fund came back.

What exactly killed it that you did in 2026 and 27? [laughter] These are all This is not financial advice. This is just hypotheticals. We're just having fun here. I think we've deployed probably half of our capital over the last five years into stablecoin related deals.

So it would have to be something that really slowed down the stable coin market which you know would probably be regulatory in nature. So you know a roll back of the Genius Act or something like that.

I think this year uh like last 12 months you've seen a ton of competition from incumbents which wasn't always true. Um, so one thing that like I view as a big risk is all of the value that is inevitably going to be created from this technology is like swallowed up by like banks. Um, or Stripe is a good example. Like we don't have exposure to Stripe, but Stripe is doing a lot of interesting things in crypto. Um, so that's maybe one that I would call out.

And then the other is um we continue to do tokens like we we don't learn from our uh mistakes in the token landscape just in the way that we design them. But I think that's going to be fixed pretty soon. So

yeah, I I'll double click on on Bobby's first answer particular uh I feel sometimes particularly in 2026 that the whole industry's turned into like a services bureau for fintech and banking. Um that's not going to get you going. how far we've fallen.

I know. I know. Hey, but you know what? The founders are doing what they should do. They're responding to product market fit, but it's just not again for early stage VC.

Uh it's less interesting. And then I think for us in particular, what would cause that would be like a failure failure of imagination, right? So you talked earlier about the wild kind of crazy thing, you know, with guardrails. That's what we like to invest in these as asynchronous uh sorry uh um these bets that if you look at them you're like man that probably won't work but if it did wow like that that's going to be amazing and so it would be like passing on ETH gas or cycles or some of the other things we've done recently um which you know knock on wood will keep us out of that position in a few years.

I'm gonna hammer on on one more thing that we talked a little bit about earlier but uh CoinDesk reported there's something like 11 billion that has been plowed so far this year into let's call it regulated permission business. I'm going to call it the boring stuff. All right, this isn't being recorded. Right. So, and and we had the conversation dead, the original ethos thing is dead.

Do you think that that trend continues or does it ever go back to like the crazy ideas that are more decentralized that are more original uh things to crypto or do we just carry on this regulated path?

I think in order for the crazy ideas to actually work from the perspective of an investor, you need a little bit more clarity on what's a security and what's a commodity. And I think that's coming. So I do think that you will get that part of the market existing. But I think the regulated part of this market is going to probably 10x over the next two years if you get market structure bill and you get securities on chain and you get SEC guidance on secondary markets. There's no

Do you think the other stuff dies or fizzles?

No, I think they they coexist. I don't think that it's a I don't think they eat each other necessarily. I just think you're going to see the whole securities industry move on chain. And in parallel, I think you're going to see regulatory clarity for a bunch of cool ideas that the founders didn't want to go to jail, so they didn't launch the product. And so we haven't seen as many great new entrepreneurial starts for the next Filecoin and the next Gollum, things like that.

All right, so the boring stuff. Yeah, more on that. We're gonna double click at five o'clock. Come to the Kelly show then. Go ahead.

I'll build on Matt's point. Um I think the other thing that that we've been lacking is, you know, early internet. We actually had some big wins really fast, right? Like the consumer internet I'm talking about not going all the way back to to Darpanet, but you know, Amazon went public pretty freaking early in the whole internet life cycle. And that created inspiration.

It also created the ability for some entrepreneurs to sort of pattern match like hey if you can use the internet to sell books I can probably use it to do this that the other thing and th those sort of broadly think about what's broadly aware out in uh the consciousness of the broader world about our industry and it's not like oh I want to go do that right oh I want to go scam people I want to steal their money I wanna right so we I think part of what'll happen with this boring stuff is it actually may create some archetypes that people can say oh blockchain actually is really useful and I can use it to do unlock value in my industry.

Yeah. Uh agree with what's been said. Uh I think I'll do like a little bit of a I see both sides here, but I'll do a little de devil's advocate thing. Um one thing that I really love about like the crypto space is that um like not only does it introduce permissionless financial rails, but it also uh is really conducive to like like permissionless and global innovation and it's kind of a hub for that. So some of these products like I let's take prediction markets for example.

Um prediction markets aren't like specifically a crypto innovation. It's it's more of a market innovation. But you saw them kind of birthe out of crypto because um you know here is a global kind of substrate where you can trade things and have logic uh that anybody can access. Uh so for that reason I think we're going to continue to see um blockchains, you know, crypto in general be this kind of permissionless hotbed for innovation. um even if it's not like the same kind of crypto ideals that we initially had.

Um so you know excited to be boots on the ground in that space and finding the tinkerers

giving us hope. Love it. Okay existential question as we close out here. You guys know from Dragonfly has recently come out and said, "Well, VC will be dead by 2030." Which

cryptovc

cryptovc Thank you. CryptoVC. Is there any other kind? [laughter]

CryptoVC will be dead by 2030 which is for those keeping up three years from now. Uh do you think that you still have a job that what you do still exists? And how does it maybe look different? You got to be really quick because Zen's going to cut us off here.

It's kind of happened at the beginning of the internet. You had funds like CMGI that were quote unquote internet funds and you had a whole crop and eventually it was just there were funds and so I think a similar thing starts to happen here but I think you'll see uh you know our industry persist. It might be called something different.

So you might do AI now is what you're saying.

I I think you're going to see this stable coins will be used in every industry, right? I think I think this will kind of blend with legacy financial technology to some degree. Yeah, I think that's a great answer. And I' I'd add to that a lot of what got a lot of funds to say 2024, 2025, they're not even going to make it till 2030, right? Which is which is not uh the four of us.

But, you know, the sort of get in, get a TGE, sell it, you know, as soon as your lockup's over. Like, that game's over. And I think those guys are going to be toast long before 2030.

I don't have a ton else to add. Um, I think the funds that exist today and are doing well, um, will have their niche just like outside of crypto like VCs have their niche. Like why does a VC win a deal? There's some combination of like their brand and what they're good at and like the relationship that they've built. So, you know, each of us on stage, we all have our brand.

you know, we are particularly uh kind of knowledgeable and helpful in the like area of applying and building on blockchain rails, right? Uh so we'll continue to win deals in that space. Um and then yeah, we just kind of become part of the broader landscape of VCs that have their own niche. Um new funds though in 2030 that call themselves crypto VCs, um I don't think that's an effective fundraising tactic.

Awesome. All right. Well, all of you, thank you so much for joining this panel. Appreciated the conversation and entertaining my index cards. Thank you guys.

Thank you.