AI Continued to Outshine Crypto in VC Dollars in Q1’25, But Is the Competition Overstated?

AI’s VC Boom Outshines Crypto—But Does It Even Matter?

Despite crypto’s late-2024 rally, venture capitalists remain far more eager to invest in artificial intelligence. But is this a genuine shift in investor preference, or is it just AI’s moment in the spotlight?

According to Pitchbook data, crypto startups in the U.S. secured $861 million in venture funding in Q1 2025. Meanwhile, AI startups pulled in a staggering $20 billion, highlighting the tech sector’s ongoing dominance.

AI companies closed 795 deals from January to March, led by Databricks’ $15.3 billion round and Anthropic’s $2 billion raise. Crypto’s biggest deal, in contrast, was Abu Dhabi’s MGX investing $2 billion in Binance, marking the exchange’s first major institutional funding round. Other notable crypto deals included Mesh’s $82 million, Bitwise’s $70 million, and Sygnum Bank’s $58 million.

AI vs. Crypto: Different Games, Different Rules

AI’s outsized funding might look like a clear win over crypto, but a closer look reveals fundamental differences in how these industries raise capital.

In 2024, AI secured $131.5 billion in VC funding globally, accounting for one-third of all venture investments. Meanwhile, crypto startups raised just $4.9 billion across 706 deals. But these numbers don’t tell the full story.

Unlike AI, which relies heavily on venture capital, crypto has a decentralized funding model. Projects can generate capital through airdrops, token sales, and community-driven funding, sidestepping traditional VC pipelines.

A recent Dragonfly report found that between 2020 and 2024, just 11 major airdrops distributed $7 billion—a unique funding method that AI lacks. This demonstrates that crypto projects can thrive without the same level of VC backing.

Crypto’s One-Time Win and the Bigger Picture

Historically, AI has always led in VC funding, with Statista data showing investment in AI rising from $670 million in 2011 to $36 billion in 2020. The only time crypto overtook AI was in 2021, when crypto startups raised $30 billion, surpassing AI’s $22.3 billion, per ABI Research.

However, crypto’s funding landscape is cyclical. During bull markets, token prices surge, fueling project treasuries without needing VC injections. In downturns, capital shifts toward tokenized assets and stablecoins, as seen in recent trends with tokenized treasuries hitting record highs.

AI’s VC Lead: A Reflection of Hype, Not Necessity

At first glance, AI’s lead in venture capital may seem like a blow to crypto’s growth. But the reality is that crypto doesn’t need traditional VC funding in the same way AI does.

While AI companies rely on deep-pocketed firms to fund R&D, crypto operates within a decentralized financial system, where users, DAOs, and token markets play a significant role in capital formation.

In other words, AI might be winning the VC race, but crypto is playing an entirely different game.

About The Author

ctleditor

See author's posts