Crunchbase Report: since January 2017, blockchain related startups worldwide have raised ~$4.5B via ICOs, almost 3.5x the ~$1.3B raised in traditional VC rounds
Recently, we found that, for 2018, the amount of money being raised by blockchain and blockchain-adjacent companies via traditional VC rounds …
Context & Ripple Effects
Crunchbase's March 2018 tally captures the moment token issuance overtook institutional capital: blockchain startups pulled roughly $4.5B through ICOs since January 2017 against only ~$1.3B in traditional VC rounds. The related coverage shows what came next on both sides — ICO volume kept climbing into mid-2018 even as quality flagged, with just 30% of the 3,470 ICOs launched since 2013 closing successfully per a later $13.7B first-five-months tally.
The VC side of the ledger then inverted the story: funds that had been out-raised by token sales poured back in, pushing blockchain VC to nearly $3.9B across the first three quarters of 2018 before the cycle turned down again in early 2019. That round-trip makes this report the baseline document for how crypto funding alternates between retail token buyers and institutional rounds.
First-order effects
- Founders building blockchain companies can now fund at scale without giving equity or board seats to VCs, directly competing away deal flow from the same firms Crunchbase tracks.
- Traditional VCs lose pricing leverage in the sector: a founder holding a $4.5B alternative no longer needs a term sheet on VC terms.
Second-order effects
- Venture firms respond by competing on the token market's own turf — the coverage shows blockchain VC swelling to nearly $3.9B by Q3 2018 as funds chase deals they previously priced, a rebound documented in CoinDesk's 280% YoY VC tally.
- Token buyers absorb risk VCs would have screened out, which surfaces later as failure data: with most ICOs never closing successfully, the secondary market inherits a wave of impaired assets.
Third-order effects
- If the pattern holds, crypto funding becomes cyclical between retail token issuance and institutional VC rather than structurally replacing either — the 2019 pullback to $334M in Q1, per PitchBook's Q1 2019 figures, followed by the record $6.5B quarter in late 2021 confirms the alternation.
- Capital formation for new technology categories splits into parallel rails — equity rounds and token sales — forcing investors and eventually regulators to treat token-based fundraising as a standing asset class rather than an anomaly.
The trend: Startup capital for crypto is cycling between retail-funded ICO booms and institutional VC waves, with each side displacing and then reviving the other.