Say goodbye to "storytelling" for funding: What kind of projects can survive past 2026?

Author: Nikka / WolfDAO( X: @10xWolfdao )

1: A Dramatic Shift in VC Investment Logic

Wintermute Ventures’ data from 2025 reveals a harsh reality: this top-tier market maker and investment firm reviewed about 600 projects throughout the year, ultimately approving only 23 deals, with an approval rate of just 4%. Even more astonishing, only 20% of those projects reached the due diligence stage. Founder Evgeny Gaevoy openly states that they have completely abandoned the “spray and pray” approach of 2021-2022.

This shift is not unique to Wintermute. The entire crypto VC ecosystem saw a 60% drop in deal volume in 2025, decreasing from over 2,900 deals in 2024 to about 1,200. Although funds are still flowing, with total global crypto VC investments reaching $4.975 billion, these funds are increasingly concentrated in a few projects. Late-stage investments account for 56%, while early seed rounds have shrunk to a historic low. Data from the US market illustrates this further: deal volume decreased by 33%, but median investment size grew 1.5 times to $5 million. This indicates that VCs prefer to heavily back a few select projects rather than cast wide nets.

The root cause of this dramatic change lies in the high concentration of market liquidity. The crypto market in 2025 exhibits an extreme “narrow” characteristic: institutional funds account for up to 75%, but these funds are mainly locked in large-cap assets like BTC and ETH. OTC trading data shows that while BTC and ETH’s market share decreased from 54% to 49%, the overall share of blue-chip assets grew by 8%. More critically, the narrative cycle for competing tokens plummeted from 61 days in 2024 to 19-20 days in 2025, leaving no time for capital to flow into small and medium projects. Retail investors are no longer frantically chasing cryptocurrencies; instead, they are shifting their attention to AI and tech stocks, leading to a lack of incremental capital in the crypto market.

The traditional “four-year bull cycle” has been completely dismantled. Wintermute’s report clearly states that the recovery in 2026 will not come naturally as before; it requires at least one strong catalyst: either ETF expansion to assets like SOL or XRP, a renewed FOMO triggered by BTC breaking the $100,000 psychological barrier, or a new narrative reigniting retail enthusiasm. In this environment, VC cannot afford to gamble on projects that only “tell stories.” They need projects that can prove their ability to survive and thrive from the seed stage, with access to institutional liquidity.

This is why investment logic has shifted from “invest in 100 projects for 1 to 100x” to “only invest in 4 projects that can survive to listing.” Risk aversion is no longer conservative but essential for survival. Top funds like a16z and Paradigm are reducing early-stage investments and shifting toward mid-to-late-stage rounds. The high-profile funding rounds in 2025—Fuel Network’s valuation dropping from $1 billion to $11 million, Berachain plummeting 93% from its peak, Camp Network losing 96% of its market cap—are starkly telling the market: narratives are dead; execution is king.

2: The Deadly Requirements for Seed-Stage Capital Generation

Under this extreme precision aesthetic, the biggest challenge for startups is: seed rounds are no longer the starting point for burning money but the critical threshold to prove self-sustainability.

Self-sustainability first manifests in rigorous validation of Product-Market Fit (PMF). VC firms are no longer satisfied with beautiful business plans or grand visions; they want real data: at least 1,000 active users or monthly revenue exceeding $100,000. More crucially, user retention—if your DAU/MAU ratio is below 50%, it indicates users are not buying in. Many projects fail here: they have polished whitepapers and cool tech architectures but cannot produce evidence of actual user engagement or willingness to pay. Among the 580 projects rejected by Wintermute, many failed at this stage.

Capital efficiency is the second critical threshold. VC predicts that in 2026, many “profitless zombies” will emerge—companies with ARR of only $2 million and annual growth of 50%, unable to attract Series B funding. This means seed teams must achieve a “pre-set survival” state: monthly burn rate not exceeding 30% of revenue or early profitability. While this sounds harsh, in a market with drying liquidity, it’s the only way out. Teams need to be lean—under 10 members, prioritize open-source tools to cut costs, and even supplement cash flow through side businesses like consulting. Teams of dozens, burning cash at high rates, will likely be unable to secure the next round in 2026.

Technical requirements are also rapidly escalating. Data from 2025 shows that for every dollar invested by VC, 40 cents flow into AI-crypto projects—double the proportion from 2024. AI is no longer optional but essential. Seed projects need to demonstrate how AI helps shorten development cycles from six months to two, how AI-driven agents facilitate capital transactions or optimize DeFi liquidity management. Additionally, compliance and privacy protections must be embedded at the code level. With the rise of RWA (Real World Asset) tokenization, projects need zero-knowledge proofs to ensure privacy and reduce trust costs. Projects ignoring these requirements will be considered “lagging behind.”

The most critical demands are liquidity and ecosystem compatibility. Crypto projects must plan their listing pathways from the seed stage, clearly connecting to institutional liquidity channels like ETFs or DEX aggregators. Data shows that in 2025, institutional funds account for 75%, and the stablecoin market surged from $206 billion to over $300 billion. Projects driven solely by narratives face exponentially increasing difficulty in fundraising. They need to focus on ETF-compatible assets, establish early partnerships with exchanges, and build liquidity pools. Teams thinking “raise money first, list later” will likely not survive past 2026.

All these requirements mean seed rounds are no longer just testing waters but a comprehensive exam. Teams must be cross-disciplinary—engineers, AI experts, financial analysts, compliance advisors—indispensable. They need to adopt agile development for rapid iteration, speak with data rather than stories, and pursue sustainable business models rather than just fundraising for survival. 45% of VC-backed crypto projects have already failed; 77% generate less than $1,000 in monthly revenue; 85% of token projects launched in 2025 are underwater—these figures tell us that projects lacking self-sustainability will not reach the next funding round, let alone listing and exit.

3: Warnings and Strategic Shifts for Investment Institutions

For strategic investors and VC firms, 2026 is a watershed: either adapt to new rules or be eliminated by the market. Wintermute’s 4% approval rate is not bragging about their pickiness but warning the entire industry—those still using old models of “spray and pray” will suffer heavy losses.

The core issue is that the market has shifted from speculation-driven to institution-driven. When 75% of funds are trapped in pension funds and hedge funds, retail investors flock to AI stocks, and the rotation cycle for competing tokens shortens from 60 days to 20 days, VCs still casting wide nets on storytelling projects are actively giving away money. GameFi and DePIN narratives declined over 75% in 2025; AI-related projects fell an average of 50%. The liquidation cascade in October, with $19 billion in leveraged positions wiped out, underscores one thing: the market no longer pays for narratives—only for execution and sustainability.

Institutions must change direction. First, fundamentally revise investment standards: shift from “how big can this story be” to “can this project prove self-sustainability at the seed stage.” No longer scatter large sums early; instead, concentrate on a few high-quality seed projects or move to later rounds to reduce risk. Data shows that late-stage investments in 2025 already account for 56%, not by chance but as a market vote.

More importantly, redefine investment tracks. The integration of AI and crypto is not just a trend but a reality—2026 projections estimate that over 50% of investments will be in AI-crypto crossover fields. Institutions still investing in purely narrative-driven tokens, ignoring compliance, privacy, and AI integration, will find their projects unable to access liquidity, list on major exchanges, or exit profitably.

Finally, evolve investment methodologies. Outbound sourcing should replace passive waiting for pitches; due diligence must accelerate, replacing lengthy evaluation processes; response speed should replace bureaucracy. Additionally, explore structural opportunities in emerging markets—AI Rollups, RWA 2.0, cross-border payment stablecoin applications, fintech innovations in emerging markets. VC must shift from a “gambling for 100x returns” mentality to a “curated survivor” approach, using a 5-10 year long-term perspective rather than short-term speculation.

Wintermute’s report is essentially a wake-up call for the entire industry: 2026 is not a natural extension of a bull market but a battlefield of winners-take-all. Those who adapt early to precise aesthetics—whether entrepreneurs or investors—will dominate when liquidity returns. Those still clinging to old models, old thinking, and outdated standards will find their projects failing one after another, tokens going to zero, and exit channels closing one by one. The market has changed; the game rules have changed. The only constant is that projects with genuine self-sustainability and real ability to list on major exchanges deserve the capital of this era.