Crypto Startup Funding Hits $5B in Q1 2026 Despite Decline
- Crypto startups raised $5 billion in Q1 as prediction markets led new deal flow.
- Payments and trading tools drew fresh backing as investors favored utility-led plays.
- Kalshi and Polymarket topped the quarter as major investors broadened their bets.
Crypto startups raised nearly $5 billion in the first quarter of 2026, DefiLlama data shows. That marked a 16% drop from nearly $6 billion a year earlier. Even so, investors kept writing large checks across the sector. Prediction markets led the quarter with more than $1.7 billion in capital. Payments followed with $735 million, while trading infrastructure drew $423 million. Sequoia Capital, Founders Fund, Bain Capital, and Alibaba Group appeared among the backers.
The mix of deals pointed to a market that favored platforms, payment rails, and institutional tools. It moved away from pure token speculation. What does that funding split say about where crypto investors see the next growth lane?
Prediction Markets Capture the Largest Checks
Prediction market companies took the biggest share of capital in the quarter. Kalshi led the group with a reported $1 billion raise at a $22 billion valuation. Bloomberg reported the deal, citing people familiar with the situation.
Coatue Management led Kalshi’s raise, according to those reports. Kalshi has not officially confirmed the deal. Still, the reported financing placed regulated prediction markets at the top of the funding table.
Polymarket followed with a $600 million raise. Intercontinental Exchange said it supplied the new capital. The company also said it may acquire up to $40 million of Polymarket securities from existing holders.
Payments and DeFi Platforms Pull in Capital
Payments ranked second among funded sectors. Rain raised $250 million in a Series C round at nearly a $2 billion valuation. Iconiq Capital led the round, with Sapphire Ventures, Dragonfly Capital, Bessemer Venture Partners, and Galaxy Digital also participating.
Rain combines card issuance with stablecoin payment rails. The model lets crypto-native organizations transact with the traditional economy. In January, BitGo also raised more than $213 million in an initial public offering, valuing it at over $2 billion.
BitGo listed on the New York Stock Exchange at $18 per share. The source text said the offering drew strong institutional demand. Elsewhere, Flying Tulip raised $206 million through a public token sale at a fully diluted valuation of $1 billion.
Flying Tulip’s development came under decentralized finance architect Andre Cronje. The sale funded a protocol that combines trading, lending, and insurance. The platform focuses on automated yield strategies and risk management for institutional and advanced retail users.
Infrastructure, Market Access, and Social Platforms Advance
Whop raised $200 million in a strategic round that valued the company at $1.6 billion. Tether made the full investment. Whop runs a digital marketplace for software, courses, and memberships with native stablecoin payments.
In January, LMAX Group raised $150 million in strategic financing from Ripple. The partnership will integrate Ripple’s RLUSD stablecoin as collateral across LMAX trading venues. The firms said the move aims to improve margin efficiency and enable round-the-clock settlement.
Related: Wall Street Regulators Step Up Oversight of Crypto and Prediction Markets
Alpaca also raised $150 million in January in a Series D round at a valuation above $1 billion. Drive Capital led the raise, with backing from Citadel Securities, MUFG Innovation Partners, Kraken Ventures, BNP Paribas’ venture arm. The company said it will fund global expansion and stronger security.
Bluesky secured $100 million in a March Series B round led by Bain Capital’s crypto arm. Anthos Capital, Bloomberg Beta, and the Knight Foundation also joined. In February, Anchorage Digital raised $100 million from Tether at a valuation above $4 billion, extending support for regulated institutional infrastructure.
