Despite a significant drop in the number of deals, with only 405 completed in the first quarter of 2025—a 39.5% decline from the previous year—total funding for the sector more than doubled year-over-year, reaching $6 billion.

The new fund will focus on investing in specialized crypto venture capital firms that have demonstrated successful track records in nurturing innovative blockchain projects.

This fundraising effort comes at a time when cryptocurrency markets are recovering from a two-year downturn, with Theta beginning its fundraising in late 2022 during a bear market.

The recent $1.4 billion theft from Bybit, the largest hack in crypto history, underscores ongoing operational risks in the industry, which may increase institutional demand for enhanced security measures.

Theta Capital Management has successfully raised over $175 million for its flagship Theta Blockchain Ventures III fund-of-funds, signaling a resurgence of institutional interest in early-stage crypto startups.

The industry is also experiencing increased consolidation, with mergers and acquisitions involving both crypto-native companies and traditional fintech firms.

Current venture capital interest is shifting towards startups involved in crypto infrastructure, asset management, and trading, which are perceived to have real-world value.

Despite challenging market conditions, Theta has attracted investments from family offices, institutional investors, and high-net-worth individuals, suggesting a positive shift in market sentiment.

The $175 million raised is expected to catalyze investments in promising early-stage ventures that could disrupt traditional financial models.

Circle's anticipated IPO could significantly influence crypto equity valuations, with analysts suggesting it may raise expectations if valued above $4 to $5 billion.

Ruud Smets, managing partner and chief investment officer at Theta Capital, highlighted their strategy of backing crypto-native VC firms to outperform generalist investors, especially in initial funding rounds.

Rising institutional demand, coupled with a mature regulatory framework and recent U.S. Bitcoin ETF approvals, indicates positive momentum in the crypto market.