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Crypto venture capital has spent nearly two years in a deep sleep, according to Michael Dempsey, managing partner at venture firm Compound.
His explanation is simple. The builders who once chased crypto are now chasing artificial intelligence, and the money is following them.
Dempsey made the remarks during an October 13, 2026 interview on the Empire podcast.
A two-year lull, by Dempsey’s account
Dempsey described crypto venture activity as close to dormant. The stagnation, per the research summary of his comments, stretches back to 2024.
He drew a sharp contrast with 2021. Back then, tech entrepreneurs streamed into crypto, eager to build on the next big platform.
Today, according to Dempsey, the wider tech sector has its eyes almost entirely on AI. That shift is pulling both people and capital away from crypto projects and toward AI work.
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Why Compound’s view carries weight
Compound is not a crypto-only shop with an axe to grind. The firm manages over $200M in assets and invests from the seed stage through Series A.
Compound spreads those early bets across AI and machine learning, robotics, biotech and crypto. That portfolio mix gives Dempsey a side-by-side view of how founder interest is moving between categories.
The token incentive problem
Dempsey did not frame crypto’s slump purely as a talent drain. He also pointed to a structural issue: token incentives.
He acknowledged that tokenization carries real potential benefits. But he stressed that token incentives have struggled to deliver long-term alignment.
What this means for crypto builders and investors
The research summary accompanying Dempsey’s comments frames the slowdown as a possible sign of investor caution. Under that reading, backers are shifting toward projects with stronger fundamentals and away from speculative stories.
None of this means crypto venture is finished. Compound itself still lists crypto as one of its four investment areas.
