Following the acceleration of the encryption industry project, investors began to focus more on whether the product could retain users and cover operating costs. According to foreign media, the Chief Executive Officer of Truth Ventures, Varun Datta, believed that such tests were suitable for mature companies, but should not be used directly in the seed wheel team.
The money continues to flow to mature companies.
According to Galaxy Research data, during the first quarter of 2026, a total of 355 loans were completed in the area of encryption and block chains, amounting to approximately $4 billion. Compared to the previous quarter, the amount of financing fell by 50 per cent and the number of transactions by 16 per cent.
According to Galaxy, the decrease was due mainly to a decrease in large later financing. Although seed wheels and early projects are still being supported, late-stage companies took 57 per cent of the funds, while young companies accounted for only 43 per cent.
By number of transactions, the pre-seed round accounted for 19 per cent of all completed transactions, while the share of later financing rose to one quarter. According to Galaxy, some of the tracks in the encryption industry are becoming mature, but new projects have not completely lost access to finance.
Investment standards should not be predetermined
Datta states that what is really to be seen in the Seed Wheel project is not recurrent income, but whether the founders really understand the issues to be addressed and whether the product provides a clear value to the user.
In his view, the failure of many encryption projects did not mean that the early investment logic had failed, but rather that some teams had failed to establish a truly sustainable product path by using currency speculation as a business model.
In his view, two more issues should be addressed when investors assess early projects: Whether the product can be accessed by the user before the funds are exhausted and whether the team has found a path from the initial product to a self-sustaining operation.
The fundraising environment is still tight.
Galaxy also noted that, in the first quarter of 2026, only about $1.1 billion was raised by the encryption industry, involving eight new funds, the lowest number since the third quarter of 2020.
According to the research institute, AI, spot-encrypted ETF products and Digital Asset Treasury are competing for institutional configuration with the Encrypted Wind Fund. If this rhythm continues throughout the year, the level of fund-raising for encryption in 2026 could be around $4 billion, down from $8.75 billion in 2025.
In terms of course distribution, trading, exchange, investment and lending companies have attracted a total of approximately $2.6 billion in a quarter, close to three fifths of all the encrypted investment in the season. Infrastructure companies completed 56 transactions, Web3, NFT, DAO, meta-cosmos and games projects totalling 39, and payment and incentive companies totalled 33.
American companies took 70% of the money.
Galaxy data show that the United States head office company received a quarter of 70.2 per cent of the encoded wind investment, representing 43.5 per cent of transactions completed. The United Kingdom and Singapore accounted for 5.3 per cent and 4.5 per cent, respectively.
The article argues that, against the backdrop of a high concentration of funding in the United States market, the criteria by which the Seed Wheel project should be screened would have a more direct impact on the access of United States encrypted entrepreneurs to institutional support. Datta suggests that early investment should still prioritize the search for Web3 and AI teams that build products around clear issues and move towards sustainable models.