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Author: Ada &Liam｜Deep Tide TechFlow
“All in Crypto”!
In 2021, Shen Nanpeng, the head of Sequoia China, typed a few words in the WeChat group, and the screenshots were quickly forwarded to countless investment groups, like a war drum, pushing the enthusiasm of the market to a higher point.
The market atmosphere was almost excited at that time. Shortly after Coinbase was listed on Nasdaq, FTX was praised as the “next Wall Street giant”, and almost all classical VCs were rushing to label “crypto-friendly”.
“This is a tech wave every thirty years,” some people describe it in this way.Sequoia’s declaration became the most iconic footnote to that bull market.
However, just four years later, this sentence sounds ironic.Many institutions that once vowed to “All in Web3” have quietly left the market, some have contracted sharply, and some have turned around to pursue AI.
The repeated jumps of capital are essentially a cold reminder of the cycle.
How are those Asian classical VCs that entered Web3 back then doing now?
The pioneer of the wilderness era
In 2012, Coinbase was just founded, and Brian Armstrong and Fred Earsam were nothing more than a pair of entrepreneurial youths in San Francisco.At that time, Bitcoin was regarded as a geek’s toy, and the price was only a dozen dollars.
At the YC roadshow, IDG Capital cast a vote for Coinbase for the angel round, and the return on the investment was estimated to be thousands of times when Coinbase landed on Nasdaq in 2021.
The story of China is equally wonderful.
In 2013, OKCoin received investment from Tim Draper and Mai Gang; in the same year, Huobi also received investment from Zhen Fund and the bet from Sequoia China the next year. Among the information disclosed by Huobi in 2018, Sequoia China’s equity in Huobi was 23.3%, making it the second largest shareholder except the founder Li Lin.
Also in 2013, Cao Darong, a partner of Lightspeed Venture Capital, introduced Bitcoin to a person named Zhao Changpeng in the card game for the first time. “You should devote yourself to Bitcoin or blockchain entrepreneurship,” Cao Darong told Zhao Changpeng.
Zhao Changpeng sold his house in Shanghai, All in Bitcoin, and everyone knows the story later. He founded Binance in 2017. In just 165 days, Binance became the world’s largest cryptocurrency spot trading platform. Zhao Changpeng later became the richest Chinese in the crypto world.
Compared with the other two exchanges, Binance’s early financing journey was not smooth, and it mainly received investments from Pancheng Capital, a subsidiary of Chen Weixing, the founder of Kuaidi Taxi, Black Hole Capital, a subsidiary of R&F Prince Zhang Liang, and several Internet blockchain founders.
A short story is that Sequoia China once had the opportunity to acquire about 10% of Binance’s equity at a valuation of US$80 million in August 2017, but the investment was not completed due to Binance reasons. Sequoia Capital also sued Binance afterwards, and the two companies had a very unpleasant quarrel.
It was also in 2014 that angel investor Wang Lijie invested in 200,000 yuan of domestic blockchain NEO (Xiaoyi), becoming the most important investment in his life.
From 2012 to 2014, when the crypto-native VC was still in its infancy, it was the classical VC that supported half of the sky of Web3. Whether it was the three major exchanges, Bitmain, imToken… Behind them are Sequoia Capital, IDG and other traditional capitals.
Everything went crazy in 2017.
Under the wave of ICO, countless tokens have soared. Wang Lijie, who has made great profits, chose to sell NEO at a price of 1.5 yuan. As a result, the NEO’s upward momentum remained unabated, with a maximum increase of more than 1,000 yuan, with a cumulative increase of more than 6,000 times in three years.
Extremely stimulated, Wang Lijie began to bet on the blockchain crazily, claiming that he “slept at one o’clock in the morning, got up at five o’clock, and saw the project party read the white paper from morning to night, and invested an average of US$2 million worth of Ethereum every day.”So much so that someone invited him to have tea, and he said, “You are delaying my money.”
In January 2018, Wang Lijie said at a blockchain summit in Macau:“I’ve made more money in the past month than I have in the past seven years.”
Also in early 2018, Xu Xiaoping, founder of Zhen Fund, posted a speech “Don’t spread” in an internal WeChat group of 500 people. He said: Blockchain is a great technological revolution in which those who follow it will prosper and those who go against it will die. It will be faster and more thorough than the Internet and mobile Internet, calling on everyone to learn to embrace this revolution.
Their speeches also became the most well-known peak symbol of that bull market cycle.
In 2018, the ICO bubble burst, thousands of token prices approached zero, and the market value of once sought-after celebrity projects evaporated.Bitcoin also fell from a high of nearly $20,000 to a high of more than $3,000, a drop of more than 80%.
At the end of that year, the currency circle became a dirty word in the investment circle.
“At that time, I participated in a venture capital event in Beijing, and a VC partner joked, ‘It doesn’t matter if you fail to start a business, you can just send a coin’. The audience burst into laughter, but I just felt blushing.” Leo, a former blockchain entrepreneur, recalled.
In the second half of 2018, the entire industry seemed to have been pressed.The hot WeChat group fell silent overnight, and the project discussion group was full of Pinduoduo’s kill links.On March 12, 2020, the market experienced another critical hit with a single-day halving, and the price of Bitcoin fell by 50% at one time, as if it was the end of the world.
“Stop talking about classical VCs looking down on the currency circle. I thought the industry was gone at that time,” said Leo.
Both entrepreneurs and investors are regarded as jokes by mainstream narratives.Just like Justin Sun recalled, he would never forget Wang Xiaochuan looked at himself with the “liar” eyes.
The currency circle in 2018 fell from the center of the wealth-making myth to the bottom of the contempt chain.
Classical VC re-entry
Looking back, March 12, 2020 is the darkest bottom of the crypto industry in the past decade.
The blood-hot K-lines are all over the circle of friends. People think this is the last blow and the industry will end there.
It can be unexpectedly and violently.The Federal Reserve released floods like a flood, pushing the originally dying market to the forefront.Bitcoin took off from its low point, gaining more than 6 times in a year, transforming into the most dazzling asset after the epidemic.
But perhaps Coinbase is the launch of the market for classical VCs to re-face the crypto industry.
In April 2021, the nine-year-old exchange rang the Nasdaq bell.It proved that “crypto companies can go public too” and gave early investors such as IDG a thousand times return.
Coinbase’s bells echo between Wall Street and the Bright Horse Bridge, recalled by crypto media person Liam,Many classicsVCAfter that, the practitioner came to him to communicate offline to understand the overall situation of cryptocurrencies.
But in Leo’s view, the return of classical VCs is not just because of the wealth effect.
“This group of people naturally wear elite masks. Even if they secretly buy some coins in the bear market, they will not publicly admit it.” What really helped them take off their masks was the upgrade of the narrative:From Crypto to Web3.
This is a concept transformation vigorously promoted by Chris Dixon, head of a16z Crypto.To directly say “investment in cryptocurrency” is equivalent to speculation in the eyes of many people, but in another word, “investment in the next generation of the Internet”, it immediately adds a sense of mission and moral justice.If you complain about the monopoly of Facebook and Google, and then emphasize decentralization and fairness, you will receive support and applause.The madness of DeFi and the outbreak of NFT can be easily incorporated into this grand narrative framework.
The popularity of Web3 narrative has caused many classical VCs to remove the moral burden.
Will, a crypto fintech investor who works for leading institutions, recalls:“We went through a cognitive shift. Early on we treated it asConsumer Internetbut this logic is falsified.What really changes our perspective is financial technology.”
In his eyes, the time when the popularity of Web3 exploded just fell between the end of the mobile Internet and the early stages of AI.Capital needs a new story, so it forcefully stuffs blockchain into the Internet framework; but what really brings this industry out of the spiral of death is the awakening of financial attributes.”Look at the successful projects, which one is not related to finance? Uniswap is an exchange, Aave is lending, and Compound is financial management. Even NFTs are essentially financialization of assets.”
Another catalyst comes from FTX.
Founder SBF emerged as a “financial genius boy” and captured the hearts of almost all large classical VCs.His positive character and rapidly expanding valuation have ignited the FOMO sentiment of global VCs.
At the venture capital and wine shop in Beijing, the investment tycoons once asked around “who can buy the old stocks of FTX and Opensea” and envied those lucky ones who had already bought it.
During this period, an interesting phenomenon also occurred:Talent flow of classical VC and encrypted VC.
Some people have left Sequoia and IDG and switched to emerging crypto funds; some have turned from crypto VCs to enter traditional institutions and directly attached the title of “Web3 person in charge”.The two-way flow of capital and talent has enabled the crypto market to truly enter the narrative of mainstream investors for the first time.
The bull market in 2021 is like a carnival.
The WeChat group is in full swing. Unlike in the past, this time there are many people from classical VCs, family offices and Internet manufacturers.
NFT is in the limelight, and VC bigwigs have replaced their avatars with high net worth NFTs such as Monkeys and Punks.Even Zhu Xiaohu, who once despised cryptocurrency, replaced it with a monkey.In the offline conference venue, in addition to encrypting native entrepreneurs, elite classical VC partners have also begun to appear.
Classical VCs have many ways to enter Web3: directly invest in crypto projects to make valuation soar; as LP investing in crypto VCs, Sequoia China, which once went to court with Binance, once became the LP of Binance Labs after the two sides settled; directly bought Bitcoin in the secondary market…
Crypto VC, classical VC, exchange and project parties are intertwined, and project valuations are constantly pushing up. Everyone is looking forward to a more brilliant bull market, but behind the hustle and bustle, risks are also quietly brewing.
VC Fall
If the bull market in 2021 is heaven, then in 2022, it will instantly turn into hell.
Success is FTX, failure is FTX.The collapse of LUNA and FTX not only destroyed market confidence, but also directly dragged a batch of classical VCs into the water.Sequoia Capital, Temasek and other institutions suffered heavy losses, and Temasek, as state-owned capital, was even held accountable in the Singapore Parliament.
After the bull market bubble burst, many once highly valued crypto projects were knocked back to their original form.Unlike the “molecular” temptation of crypto-native VCs, classical VCs have always been accustomed to betting big, and a single investment is often as high as tens of millions of dollars.They also purchased SAFTs in large quantities from encrypted VCs, becoming an important exit liquidity for encrypted VCs in the previous cycle.
What makes classical VCs even more heartbroken is that the rapid change in the crypto industry’s narratives exceed their investment logic.Projects that were once highly anticipated may be completely abandoned by the market in a few months, and what is left to investors is often the only equity and liquidity dilemma that is deeply trapped.
The Ethereum L2 track is a typical case. In 2023, Scroll completed financing with a valuation of US$1.8 billion, and Sequoia China and Qiming Venture Capital are both on the investor list.However, on September 11 this year, Scroll announced the suspension of DAO governance and the resignation of the core team, with a total market value of only US$268 million, and VC investment losses of up to 85%.
At the same time, the strong position of exchanges and market makers makes VCs appear more and more redundant.
Investor Zhe said bluntly:“Those projects with valuations below 30 to 40 million US dollars can finally be used on Binance and can make some money.Lock the positionAt the end of the period, two or three times the contract.Anyone who is more expensive and can only go to OKX or smaller exchanges, that is a loss.”
In his opinion, the logic of making money has no longer anything to do with the project itself, and only three things are determined by:
Can I go to Binance?
Is the chip structure favorable?
Whether the project party is willing to “feed meat”.
“Anyway, the trade has the greatest voice and can eat the biggest meat. How much left can be divided depends on luck.”
This words express the pain of many classical VCs.
They found that their role in the primary market is becoming more and more like a “porter”: they spend money on projects, and in the end their greatest value is harvested by the exchange, and they only get the remaining soup.Some investors even sighed:“Actually, there is no need for a primary market now. The project party can earn money by going to Binance Alpha by itself. Why do you still have to give it toVCDividend profit?”
While capital logic fails, the center of gravity of classical VC also shifts.As Will said, the popularity of Web3 happened to appear between the end of the mobile Internet and the early stages of AI. It was a “blank period, and when ChatGPT emerged, the real Polaris appeared.
Funds, talents, and narratives instantly changed their course and headed towards AI.In the circle of friends, VC practitioners who once actively forwarded Web3 financing news quickly changed into the identity of “AI investors”.
According to the observation of former classical VC investor Zac, in the heyday of the industry from 2022 to 2023, many classical VCs are watching Web3 projects, but 90% of people have stopped watching.And he predicts that if the primary cryptocurrency market in Asia-Pacific maintains its current level of desolation for another half a year to a year, more people will give up.
No more gambles
The Web3 primary market in 2025 looks like a contracting chess game overall.
The excitement has dissipated, and there are few players left behind, but the pattern is being secretly reshaped.
As a weather vane for classical VC, Sequoia Capital’s trends are still worthy of attention.
According to data from Rootdata, Sequoia China has invested in a total of 7 projects in 2025, including OpenMind, Yuanbi Technology, Donut, ARAI, RedotPay, SOLO, SoSoValue, followed by IDG Capital, Jinshajiang Venture Capital and Xiangfeng Investment. The last web3 investment of Qiming Venture Capital, which was previously active, stayed in July 2024.
According to Zac’s observations:“Now classicsVCI’m still watching Web3 projects, and I can count them with one hand.”
In his opinion, the quality of crypto projects has declined severely.
“Find hardPMF, the positive feedback received by the team that creates long-term value for users is far less than that of researchAttention EconomyandTeam that actively makes market.”Zac said.
In addition, crypto treasury companies represented by micro-strategy and BMNR have become a new investment option, but this has once again caused a blood-sucking effect on the increasingly exhausted crypto primary market.
“Do you know how many PIPE projects are on the market right now?” said Draper Dragon partner Yuehua Wang. “There are at least 15, and each requires an average of $500 million. That’s $7.5 billion. Almost all the big money in the market is on Wall Street, and they’re going to participate in PIPE.”
PIPE (Private Investment in Public Equity) refers to the issuance of shares or convertible bonds to specific institutional investors at a discounted price to achieve rapid financing.
Many listed companies that were originally unrelated to the cryptocurrency business have obtained large amounts of financing through PIPE, and then purchased large amounts of assets such as BTC, ETH, SOL, etc., and transformed into crypto treasury companies. Investment companies entering the market at discounted prices often make a lot of profits.
“This is why the primary market has no money.” Wang Yuehua said.“All the funds go to play with higher certaintyPIPE, Who is willing to take the risk of investing in the early stage?”
Some people leave, some people stick to it, Will still choose to believe and stick to it. He believes in Web3, AI, and is even willing to invest in public goods that seem to have “no business model”.
“Not everyone has to do business,” Will says. “Really great projects often start with a simple public goods. Just like Satoshi Nakamoto created Bitcoin, he did not pre-mine, did not raise funds, but created the most successful financial innovation in human history.”
The dawn of the future
Several big events that happened in 2025 are changing the rules of the game.
Circle’s listing is like a spark, lighting up stablecoins with RWA (Real-World Assets).
The stablecoin issuer landed on the New York Stock Exchange at a valuation of about $4.5 billion, giving Classical VC a long-lost “non-tokenized” exit sample.Subsequently, Bullish, Figure and others went public one after another, giving more confidence from investors.
“We don’t touch the first and second level of pure tokens, but we will look at stablecoins and RWAs.” Many classical VC investors made the same judgment.The reason is simple: the space is large enough, the cash flow is visible, and the regulatory path is clearer.
The business model of stablecoins is more “banked”, with reserve fund spreads, issuance/redemption and settlement fees, service fees for compliance custody and clearing networks, and naturally has the possibility of sustainable profitability.
RWAThen, receivables, treasury bonds, mortgages/real estates, fund shares, etc. are “moved to the chain”, and the income comes fromIssuance/Matching/Hosting/RotationFees and interest rates for multiple links.
If the previous generation of crypto companies listed on the US stock market were mainly exchanges, mining companies, and asset management companies, then the new generation of prospectuses belong to stablecoins and RWA.
Meanwhile, the boundaries between stocks and tokens are becoming blurred.
“Micro-Strategy (The Strategy-style treasury strategy has attracted a group of imitators. Listed companies have allocated leading assets such as BTC/ETH/SOL through equity financing or PIPE additional issuance, and have turned into “coin stocks”.
Behind the leaders of this track, you can see a large number of classical VCs such as Peter Tiel, and some institutions even entered the market personally. For example, Huaxing Capital announced that it had bought BNB for US$100 million and chose to participate in crypto asset allocation in the open market.
“The traditional financial world is embracing encryption,” said Wang Yuehua. “You see, Nasdaq spent $50 million to invest in Gemini. This is not only a capital action, but also a change in attitude.”
This transformation is also reflected at the LP level.According to several respondents, traditional LPs such as sovereign funds, pension funds, and university endowment funds have begun to reevaluate the allocation value of crypto assets.
Ten years of capital past has risen and fall like a tide.Classical VCs in Asia once pushed exchanges to the stage, and also shouted “All in” in the bull market, but in the end they became marginal characters in the crypto world.
Although the reality is quiet at present, the future may not be dawning.
Just as Will firmly believes: “Classical VCs will definitely be more allocated to crypto-related financial technology investments.”
Will classical VCs enter on a large scale again in the future?No one dares to assert.The only thing that is certain is that the pace of progress in the crypto world will not stop.
