Study: Nearly Half of VC-backed Crypto Projects are Dead

In 2024, venture capital (VC) investments in the crypto and blockchain sector reached approximately $13.7 billion, marking a substantial 28% increase from the previous year's total of $10.7 billion (source). This significant rise underscores investors' growing confidence in blockchain technology. Typically, VC backing in the crypto space is viewed as a strong endorsement, leading investors to assume that projects supported by prominent VCs are more likely to succeed. However, our recent research, conducted in collaboration with Storible, challenges this perception, revealing that even projects backed by reputable VCs frequently face substantial failure rates.

Key Findings

1. Nearly half of all VC-backed crypto projects are dead.
2. 77% of VC-backed crypto projects fail to generate $1,000 in monthly revenue.
3. Polychain Capital has the highest rate of investment failures, with 44% of its projects dead.
4. Approximately one in five projects backed by Binance Labs have become dead.

Methodology

First, we compiled a list of Tier 1 and Tier 2 venture capital firms from Cryptorank. 

For each VC, we identified all investments announced between January 1, 2023, and December 31, 2024. There are 1,181 projects in total. 

For every investment, we collected the Token Price, Total Funds Raised, and the All-Time High (ATH) Price, based on a snapshot taken on May 3, 2025. Additionally, we gathered each project's 30-day revenue data from DefiLlama. 

A project was categorized as "Failed" if its token price had fallen by more than 90% from its ATH, or if its 30-day revenue was below $1,000. 

Projects whose token prices had dropped by more than 90% from their ATH were classified as "Dead". 

Any investments with incomplete data were excluded from our final analysis.

This research is conducted from May 1st to May 15th. 

VCs backing does not guarantee success

Contrary to popular belief, VC investment doesn't always translate to project success. Our analysis shows that a striking 56.72% of VC-backed crypto projects have failed. Even more troubling, 45.34% of these projects are outright dead, having ceased operations entirely. Further highlighting the issue, an overwhelming 77.45% of VC-backed crypto projects generate under $1,000 monthly revenue, emphasizing widespread underperformance despite substantial financial backing.

Even Top-tier VCs Struggle to Ensure Project Success

Top-tier VCs typically attract promising projects due to their extensive resources and networks. However, even these prestigious backers face high failure rates:

• 37.45% of Tier 1 VC-backed projects have failed.
• 34.56% of these are now completely dead.
• 33.41% earn less than $1,000 per month.

Top 10 Tier-1 VCs with the highest rates of incubating dead projects:

Among these, Polychain Capital and Yzi Labs (previously Binance Labs) stand out, with Polychain having nearly half (44%) of its backed projects being dead, and approximately 76% failing to earn meaningful revenue. Similarly, Yzi Labs exhibits a high failure rate at 72%, highlighting the risks even prominent VCs face in crypto investments.

Top 5 Tier-1 Angel Investors with highest dead-project rates:

Balaji Srinivasan, known for his roles as former CTO of Coinbase and General Partner at Andreessen Horowitz, demonstrates a concerning 57% dead-project share, illustrating that even highly influential and experienced figures in crypto aren't immune from significant investment failures.

Still, Higher Fundraising Correlates with Higher Success

Not surprisingly, the amount raised during fundraising rounds strongly correlates with project success:

Projects raising over $50 million exhibit significantly lower failure rates, implying substantial capital as a crucial factor in crypto success. On the other end of the spectrum, projects that raised less than $5 million saw failure rates above 33% and nearly one in five ended up dead, underlining how limited funding severely impacts a project's ability to survive.

VC backing remains advantageous

Despite the bleak statistics, VC-backed projects still fare considerably better compared to their non-VC-backed counterparts. Using the “dead coins” list from AlphaQuest, we analyzed whether the dead projects had any backers (data sourced from CryptoRank). From there, we found out:

Crypto projects without VC funding have a death rate four times higher than those with VC backing. This reinforces the value and importance of institutional backing despite its limitations.

Conclusion

Ultimately, having prominent backers still significantly improves a project's chance of survival and success due to increased resources, credibility, and networking advantages. However, as demonstrated, VC or angel backing does not guarantee a project's ultimate success. Investors should be mindful of the inherent risks and maintain realistic expectations when evaluating crypto ventures.