AI boom leaves crypto VC fundraising in the dust, founders warn

Artificial intelligence companies are leaving crypto startups in the dust, founders warn.

Paul Brody, the former EY global blockchain lead turned CEO of Nightfall Networks, told DL News that it's a bad time for crypto teams trying to raise capital.

That’s because AI companies are growing so quickly that expectations for new startups have risen sharply, he said.

“What used to be seen as strong early performance — around $2 million in first-year revenue — is no longer enough,” Brody said. “Now, investors expect closer to $4 million.”

In other words, that surge in expectations is making it harder for crypto startups to compete for funding.

Still, Brody sees some room for optimism.

“The one silver lining is that at least some VCs are sitting back and saying, gee, we have an awful lot overcommitted to AI,” he said. “Maybe we need a little bit of other things in our portfolio.”

And fundraising data from this week backs him up. Venture investors poured in nearly $37 million into crypto startups, DefiLlama data shows.

Here are the top three raises this week.

BetHog, $10 million

Edinburgh-based crypto casino BetHog raised $10 million in a Series A round, bringing its total funding so far to $16 million.

Will Ventures and RockawayX led the raise. Bullpen Capital, 6th Man Ventures,, and Advancit Capital also backed the round. The company was founded by Nigel Eccles and Rob Jones, the team behind FanDuel.

The company said that the funding will support Sentient Studios, a new business that lets casinos use AI-powered virtual dealers instead of human staff.

Hata, $8 million

Hata, the Malaysian crypto exchange, raised $8 million.Bybit led the round with support from global family offices. It follows a $4.2 million seed round in 2025, also backed by Bybit.

Hata says it holds licences from both Malaysia’s Securities Commission and the Labuan Financial Services Authority.

The platform has grown quickly, reaching over 200,000 users, according to the company.

Kaio, $8 million

Abu Dhabi-based KAIO raised $8 million in a round.

Stablecoin giant Tether led the raise with backing from Laser Digital, Systemic Ventures, and Further Ventures. Total funding now stands at $19 million.

KAIO builds blockchain infrastructure that allows regulated investment funds to be issued and traded on-chain. Its platform gives both retail and institutional investors access to major traditional funds, including those from BlackRock and Hamilton Lane.

You’re reading the latest instalment of The Weekly Raise, our column covering fundraising deals across the crypto and DeFi spaces, powered by DefiLlama.

Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email him at lance@dlnews.com.