Key Takeaways
- • Michael Dempsey, managing partner at venture firm Compound, says crypto venture activity has been close to dormant for nearly two years, with the stagnation dating back to 2024.
- • Dempsey attributes the slowdown to talent migration: builders who once chased crypto are now pursuing artificial intelligence, and capital is following them.
- • Compound manages over $200M in assets and invests from seed through Series A across AI and machine learning, robotics, biotech and crypto.
- • Dempsey cites token incentives as a structural problem, noting they have struggled to deliver long-term alignment despite tokenization's potential benefits.
- • Compound still lists crypto as one of its four investment areas, indicating the slowdown is not a full exit from the sector.
Summary
Crypto venture capital has been close to dormant for nearly two years, according to Michael Dempsey, managing partner at venture firm Compound. Dempsey made the remarks during an October 13, 2026 interview on the Empire podcast, as reported by Crypto Briefing. He contrasted the current environment with 2021, when tech entrepreneurs streamed into crypto to build on what they saw as the next major platform. Today, he says, the broader tech sector is focused almost entirely on AI, pulling both people and capital away from crypto projects.
Dempsey's view draws on Compound's portfolio, which manages over $200M in assets and invests from the seed stage through Series A. The firm spreads its early-stage bets across AI and machine learning, robotics, biotech and crypto, giving it a cross-sector view of how founder interest is shifting between categories.
Dempsey also pointed to a structural issue beyond talent. He acknowledged that tokenization carries real potential benefits but stressed that token incentives have struggled to deliver long-term alignment between builders, users and investors. The accompanying research summary frames the slowdown as a possible sign of investor caution, with backers moving toward projects with stronger fundamentals and away from speculative narratives.
Dempsey's comments do not signal that crypto venture is finished. Compound continues to list crypto as one of its four investment areas.
Dempsey's view draws on Compound's portfolio, which manages over $200M in assets and invests from the seed stage through Series A. The firm spreads its early-stage bets across AI and machine learning, robotics, biotech and crypto, giving it a cross-sector view of how founder interest is shifting between categories.
Dempsey also pointed to a structural issue beyond talent. He acknowledged that tokenization carries real potential benefits but stressed that token incentives have struggled to deliver long-term alignment between builders, users and investors. The accompanying research summary frames the slowdown as a possible sign of investor caution, with backers moving toward projects with stronger fundamentals and away from speculative narratives.
Dempsey's comments do not signal that crypto venture is finished. Compound continues to list crypto as one of its four investment areas.
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