Crunchbase data shows VC investments in blockchain-related startups, excluding ICOs, reached $1.3B in 2018, exceeding investment totals of previous 18 months
Although bitcoin and blockchain technology may not take up quite as much mental bandwidth for the general public as it did just a few months ago …
Context & Ripple Effects
When Crunchbase last sized this market in March, it found that since January 2017 blockchain startups had raised roughly $4.5B via ICOs against only about $1.3B in traditional VC rounds — tokens were the dominant funding rail by nearly 3.5x ([[a:927252]]). This new data point marks the inflection: equity investors alone matched that entire 18-month VC total within the first months of 2018.
The significance is directional, not just volumetric. As public bitcoin enthusiasm cooled, institutional capital was still accelerating into the category — a pattern the rest of 2018 confirmed before reversing hard in 2019.
First-order effects
- Blockchain founders now have two live funding channels at comparable scale, shifting deal dynamics from 'raise an ICO or raise equity' to negotiating between them — with VCs no longer the smaller pool.
- Traditional VC firms that sat out 2017's token boom gain a route into the sector on their own terms, buying equity stakes without touching token structures.
Second-order effects
- The acceleration held through the year: blockchain and crypto-focused startups went on to raise nearly $3.9B through VC in the first three quarters of 2018, up 280% YoY ([[a:934081]]) — meaning late-arriving funds were deploying into a market already near its peak.
- That peak set up the bust: by Q1 2019 VC investment had fallen to $334M, back in line with 2017 levels ([[a:940338]]), leaving funds that entered at the 2018 top holding positions marked well below entry.
Third-order effects
- If the pattern holds, blockchain venture funding behaves like a sentiment-coupled asset class rather than a steadily compounding one — CB Insights' mid-2019 tracking showed investment pacing toward a ~60% annual decline ([[a:943903]]) — forcing funds to underwrite crypto exposure with market-cycle risk models borrowed from trading desks, not classic venture stage math.
The trend: Venture capital's relationship with blockchain runs in boom-bust cycles keyed to crypto market sentiment, with each funding wave peaking faster than the last.