Truth Ventures CEO: Crypto investors should not judge seed-round startups based on recurring revenue

Truth Ventures CEO calls: Seed round crypto startups should not be required for recurring income

According to RootData statistics, as of the end of July 2026, 99 crypto projects have been declared closed, entered bankruptcy proceedings or have been inactive for a long time. This data triggered the market to rethink early project evaluation criteria.

Market status: capital concentration and project differentiation

Galaxy Research data shows that in the first quarter of 2026, venture capital institutions invested approximately US$4 billion in 355 encryption and blockchain transactions. The size of funds fell by 50% from the previous quarter, and the number of transactions fell by 16%. The analysis pointed out that this difference is mainly due to the decrease in large-scale financing in the later period, while seed rounds and early rounds of transactions are still continuing. However, later companies still received 57% of investment funds, while young companies accounted for only 43%.

Funding is highly concentrated in a few business areas. Trading, exchange, investment and lending companies received approximately $2.6 billion, accounting for nearly three-fifths of the quarter's total crypto venture capital. Infrastructure companies completed 56 transactions, ranking second; Web3, NFT, DAO, Metaverse and Games companies completed 39 transactions; and payment and reward companies completed 33 transactions.

April data further confirmed the trend of capital concentration. Among the 55 crypto financing incidents disclosed that month, centralized financial companies raised approximately $606 million, accounting for the majority of the total $860 million; infrastructure companies received $105 million through 14 transactions; and DeFi Enterprises raised $90 million through 19 transactions.

Seed round evaluation: founder perceptions are more important than financial data

Varun Datta, CEO of Truth Ventures, pointed out that the lessons learned from the market reshuffle mainly apply to mature companies and should not be mistakenly applied to startups. "It's unfair to expect a brand new team to demonstrate recurring revenue," he said. They are still in the early stages of development and are not suitable for measurement by such indicators. "

Datta emphasized that seed-round investors should focus first on the founder's depth of understanding of the issue, rather than on revenue data that may not have yet been generated. Product design and the value it creates for users are a more appropriate basis for evaluation when the company is just starting out. "At the seed stage, the true sign of success is never income, but the founder's deep understanding of the problem being solved. "He believes that products must solve real problems, rather than just using tokens as the main financing tool. The root cause of the failure of many crypto projects lies in attempts to replace viable business models with token speculation.

But Datta said protecting seed companies from inappropriate revenue tests does not mean investors can ignore weak products or teams. "This is not about protecting weak companies, but about reminding investors not to use growth criteria to measure new startups. "Under his approach, investors should evaluate whether the product can gain users before it runs out of money and whether the founder has found a path from product development to the company's self-sustainability.

Venture Capital Funding Environment: Competition Intences but Opportunities Remain

Galaxy also found that only 8 new crypto venture capital funds completed fundraising in the first quarter, totaling approximately US$1.1 billion, setting a record low since the third quarter of 2020. Research institutions believe that the difficulty in raising funds stems from the fact that AI companies, spot crypto ETFs and digital asset treasury companies are competing for institutional allocation. If the current rate continues throughout the year, the total amount raised by crypto venture capital funds in 2026 will be approximately US$4 billion, down from US$8.75 billion in 2025.

However, capital competition has not undermined investors 'interest in companies serving specific commercial markets. Utkarsh Ahuja, founder of Moon Pursuit Capital, said investors should distinguish scientific progress from business models where customers are willing to pay. Infrastructure companies still need to develop adoption plans that do not rely on rapid breakthroughs in technology.

Galaxy data shows that the median size of crypto transactions in the first quarter exceeded US$4.5 million, a record high. However, research institutions warned that only 12% of completed transactions disclosed valuation information, and the data was heavily biased towards late-stage companies.

U.S. startups account for 70% of venture capital funding

According to statistics, US-based companies received 70.2% of all crypto venture capital funds in the first quarter and completed 43.5% of transactions. The United Kingdom and Singapore followed closely with 5.3% and 4.5% respectively. This means that decisions on seed round evaluation standards will have a particularly profound impact on U.S. crypto founders seeking institutional support. Datta said early investors should focus on companies building sustainable models in the Web3 and AI space. Truth Ventures 'investments range from seed to late-Series rounds, focusing on supporting founders who develop products around clear issues, including Web3 infrastructure, decentralized applications and digital financial systems.