Crypto startups embrace open-ended, rolling funding rounds that quickly lift valuations, as crypto funds seek to deploy unspent cash raised in 2021 and 2022
Context & Ripple Effects
Crypto startup investment had begun to recover in early 2024, with quarterly VC investment rising to $2.5 billion, but crypto-focused managers were simultaneously finding it difficult to raise fresh capital from limited partners after the 2022 downturn.
That mismatch—available capital in existing funds but constrained fundraising for new vehicles—gives rolling rounds a clear role: they provide startups a continuing channel to absorb capital while funds put earlier commitments to work. It also follows a longer shift toward VC-style fund structures and longer lockups in crypto.
First-order effects
- Crypto startups using open-ended rounds can take capital over time rather than tying fundraising to a single priced close, allowing reported valuations to move up quickly as new money enters.
- Crypto funds with unspent capital from 2021 and 2022 gain an immediate deployment route, while founders gain bargaining leverage from a less discrete fundraising process.
Second-order effects
- Funds struggling to raise new commitments may face added pressure to show portfolio deployment and markups; the difficulty of raising fresh crypto VC capital makes the performance of existing vintages more consequential.
- Startups pursuing conventional rounds may need to weigh whether a rolling structure improves financing flexibility or complicates price discovery for later investors.
Third-order effects
- If rolling rounds persist, crypto venture financing could become less centered on periodic, independently priced rounds and more dependent on the pace at which legacy fund capital is deployed.
- The pattern may widen the gap between private valuations and durable investor appetite: higher marks can support follow-on fundraising, but they do not by themselves resolve limited partners' demand for realized gains.
The trend: Crypto venture capital is shifting from a new-fund fundraising cycle toward the deployment and valuation management of capital raised in earlier boom-era vintages.