Venture capital (VC) emerged in the 20th century as a vehicle for elite investors to place unprecedented bets on generational opportunities. These investments transformed American lives — and the world — eventually fueling the internet boom of the 1990s and 2000s. VC was rightfully acclaimed to be the gateway to America’s future and prosperity. Success was abundant, with streams of capital piling into this asset class.
By 2025, that vigor and excitement no longer exists. Data suggests rapid consolidation with the number of VC funds dropping 25 percent from 2021 to 2024. Daring bets on innovators have given way to relatively “safer” disbursements to more mature companies. Ironically, VC’s rapid but unsustainable success contributed to its decline as returns diminished. In venture’s early days, America’s solvency was sound. But somewhere down the line amid rising global tensions and the deteriorating economy, VC lost its soul.
As a founder who’s raised multiple VC rounds, I can attest: The industry’s less transparent than the self-help podcasts suggest. Inflation has tightened capital, breeding a bureaucracy that believes being wrong is costlier than ever. Investors pick steady doubles over the occasional home run to minimize risk. Rational? Yes, but uncertainty’s the hidden cost of innovation.
Greater competition for resources is obvious. Far less obvious is the loss of founder creativity and expression. For founders, pitching has transformed from convincing capital providers that your idea or product will change the world to a rehearsed sales pitch modeled after yesterday’s successes. Ask yourself: How long until innovation stalls if we’re uniformly rewarding the same behavior. As the saying goes, “Never look back unless you are planning on going that way.”
VC peaked in 2022 and never recovered. VC funds raised a record almost $225 billion in 2022; by contrast, recent data by PitchBook and NVCA suggests they’ll close far below that in 2025. University of Chicago Booth adjunct assistant professor of entrepreneurship Stefan Hepp says, “The creation of unicorns is driven by a fear of missing the next Meta or Amazon,” contributing to overinvestment and immense losses post tech-boom. As the final nail in the coffin hits given recent concerns around AI valuations, Bitcoin has emerged as an unexpected benchmark for the required rate of return on capital.
Bitcoin advocate Michael Saylor has long touted the cryptocurrency’s scarcity. According to a recent Fortune article, BlackRock CEO Larry Fink warns that “America’s rising national debt could threaten the dollar’s status as the world’s reserve currency, potentially leading to decentralized assets like Bitcoin taking its place.” Despite CEO Jamie Dimon being a known skeptic, JPMorgan launched the JPM depository token earlier this year, empowering institutions to securely move funds onchain. They also recently filed to offer Bitcoin-backed structured notes.
Elite psychology is changing in real time: Fortunes must be protected. Much like the FOMO that drove outsized capital into venture capital over the past few decades, fear of underperforming Bitcoin’s returns is popularizing the asset. Entrepreneur-turned-politician Vivek Ramaswamy suggests that Bitcoin’s return profile may become the new rate of return investors benchmark for the incremental cost of capital. Bitcoin minimizes counterparty risk and the chances of its success grow the more people adopt it. Most of all, its success doesn’t hinge on the efforts of any singular party with 24/7 liquidity, unlike traditional venture investments.
While in-vogue now, however, Bitcoin’s success doesn’t preclude it from downturns. Crypto’s already had a few brutal winters categorized by liquidations and widespread panic.
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VC gained popularity as a means to grow money; Bitcoin has become popular, in part, due to concerns about the future of money. To get funded now, you might have to convince prospective investors you’ll return capital faster, and with fewer risks, than Bitcoin.
VC in the 2020s bears little resemblance to what it was in the 1990s. The industry commoditized the path from idea to IPO, erecting bureaucratic barriers to safeguard profits. Founding shifted from proving you’ll win to arguing you’re least likely to lose, thanks to “advantages.” PitchBook data shows the number of new unicorns in 2025 is down considerably from the 580-plus we saw in 2021, signaling this “drought” might just be the new normal.
Now, more than ever, founders must heed macroeconomic trends and design business models that either hedge — or exploit — them.
Some founders are hedging shareholder returns via BTC, addressing investor concerns about USD devaluation by diversifying on-hand cash. However, as mentioned, Bitcoin is highly volatile, and appropriate risk management practices should be implemented to minimize risks.
Other companies are globalizing their customer base by integrating stablecoins and capitalizing on recent industry momentum. In the U.S., crypto is seeing bipartisan support. VCs are showing interest in stablecoin companies, as well, incentivizing them to back companies using them. That said, stablecoins aren’t all created equal with depegging events underscoring the need for issuer diligence.
I remember being in awe of entrepreneurship after watching The Social Network when I was younger. Facebook (now Meta), Airbnb, Uber and several other unicorns fueled my entrepreneurial desires. My relentless pursuit led me to Wharton, Wall Street and, eventually, fancy board rooms of opportunity. While controversies, fraud and nepotism have understandably contributed to the pessimism in industry discourse, venture’s always been about making investors money. What’s changed is investor risk appetite given broader economic concerns.
To qualify for funding in 2025, your business, KPIs and scaling plans must be tighter than ever. I can tell you one thing: Having an answer for how your business is hedged against inflation will certainly help.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
