October’s Crypto Crash Marks a Turning Point for VC Funding, Says B2 Ventures’ Arthur Azizov
The sudden crypto market crash in October, which wiped out approximately $19 billion in liquidations, has become a defining moment for the venture capital landscape. According to Arthur Azizov, founder of B2 Ventures and seasoned fintech entrepreneur, the fallout has triggered a fundamental shift in how venture capitalists approach investments in the digital asset space. The days of speculative token plays and easy funding appear to be over, replaced by a more cautious, infrastructure-focused approach.
Rise in Risk Aversion Among Institutional Investors
The sharp market downturn sent shockwaves through the investment community, compelling institutional players to reassess their risk frameworks. Azizov notes that in the immediate aftermath of the crash, investors began placing greater emphasis on evaluating the quality of collateral, liquidity reserves, and the mechanics of liquidation protocols. Many funds have since tightened their exposure, enforced stricter internal risk controls, and demanded higher levels of transparency from trading venues and counterparties.
This renewed focus on risk has led venture capitalists to prioritize startups capable of withstanding financial volatility. Projects that demonstrate strong internal controls, real-time risk analytics, and capital efficiency are now receiving the lion’s share of attention, while highly speculative ventures are increasingly sidelined.
Infrastructure Over Hype: A Strategic Shift
Azizov emphasizes that forward-thinking VCs are shifting their interest away from flashy consumer-facing crypto products toward the foundational layers of the ecosystem. Blockchain infrastructure — including middleware, compliance tools, and liquidity bridges between traditional and decentralized finance — is now viewed as the key to long-term sustainability.
This pivot toward core infrastructure is not just a defensive move. It’s a proactive strategy aimed at backing companies that can deliver value regardless of market sentiment. Tokenized real-world assets, market-neutral strategies, and systems that enhance interoperability across platforms are emerging as high-priority investment themes.
AI and Crypto: Converging Trends
Interestingly, while crypto-specific funding has cooled, AI investments have surged. In 2025 alone, AI startups in the U.S. dominated venture capital activity, accounting for over a third of deal volumes and nearly two-thirds of deal value. Azizov believes that the next wave of innovation will merge these two domains. Rather than attempting to reinvent the wheel, startups are now using AI to optimize existing crypto infrastructure — from risk modeling to automated compliance — thereby enhancing scalability and efficiency.
Capital Consolidation Signals Market Maturity
The current trend of fewer, larger VC firms capturing the biggest deals reflects a broader maturation of the venture capital ecosystem. Azizov argues that this consolidation is not merely a function of risk aversion but a sign of increased sophistication. Investors are no longer chasing moonshots; instead, they are backing experienced teams who understand regulatory hurdles, can build institution-grade products, and prove traction even under market stress.
Larger funds with specialized knowledge are now better equipped to evaluate complex opportunities and navigate volatility. This clustering of capital around high-quality managers and infrastructure providers, Azizov believes, is ultimately a positive development for the industry.
What Makes a Fundable Team Today?
In today’s high-stakes environment, attracting investment requires more than a compelling whitepaper. Azizov underscores that execution under pressure, adaptability, and clarity of vision are essential attributes. He looks for founders who are deeply committed to their product yet agile enough to pivot when necessary. Operational discipline and a grounded understanding of market dynamics are mandatory.
On a broader level, he favors ventures that enhance systemic efficiency — whether by improving liquidity flows, strengthening cross-platform integration, or delivering accurate real-time data for risk assessment. Projects that can demonstrate real-world utility and resilience in turbulent conditions are more likely to secure long-term backing.
The New Metrics of Startup Success
Gone are the days when user acquisition or token price alone could attract funding. Today’s VCs are scrutinizing deeper metrics: throughput capacity, uptime reliability, compliance readiness, and cost efficiency. Startups must now demonstrate not only product-market fit but also operational robustness and regulatory foresight.
Investors like Azizov are increasingly favoring companies that can function as foundational layers in the broader fintech ecosystem. Whether through facilitating tokenized asset trading, offering institutional risk management tools, or building the next generation of blockchain middleware, the focus is squarely on enabling sustainable growth.
Regulatory Readiness as a Differentiator
As global regulators tighten their grip on digital assets, compliance has moved from being an afterthought to a core differentiator. Azizov remarks that startups capable of aligning with evolving regulatory frameworks while maintaining innovation are particularly attractive. VC firms are now actively looking for teams that can preemptively address compliance risks and integrate safeguards into their platforms from day one.
Building for the Long Haul
The shift in VC behavior suggests a growing preference for long-term value creation over short-term hype cycles. Investors are increasingly looking for companies that plan beyond the next bull run and are committed to building infrastructure that can support the ecosystem over decades. This includes platforms that facilitate interoperability between blockchains, streamline fiat-to-crypto onramps, or offer trusted custody solutions.
Resilience in Bear Markets Gains Value
One of the clearest lessons from the October crash is that resilience during downturns has become a core valuation metric. Startups that remained functional, maintained user trust, and minimized losses during the volatility are now seen as better bets. These companies have proven their ability to handle stress and are more likely to attract follow-on funding.
Looking Ahead: The Future of Crypto VC
The road ahead for crypto venture capital is likely to be more selective, more data-driven, and more aligned with long-term infrastructure growth. As speculative fervor fades, what remains is a renewed focus on building foundational tools that enhance transparency, security, and interoperability.
For founders, this means that securing funding will require not just vision, but also operational excellence, regulatory awareness, and the ability to navigate complexity. For investors, the message is equally clear: the next generation of winners will not be those who ride the hype, but those who build the rails that power the digital economy forward.