VC Halo Fades as Hyperliquid Hits $30B Market Cap
a16z Crypto's portfolio has seen almost one project fail each month this year. The list of discontinued projects includes Entropy, Yupp, Foundation, Syndicate, Orchid Protocol, Legend, Proof of Play, and Linera. These eight projects were among the 189 investments made by a16z Crypto, with 42 having ceased operations or been sold off.
The funding records show that just three of these failed projects, Yupp, Syndicate, and Entropy, burned through $87 million in total. Despite onboarding 1.3 million users, Yupp couldn't find a business model. Syndicate invested $27.8 million in DAO tools, but the market turned out to be an order of magnitude smaller than expected. Entropy secured $25 million for decentralized custody and attempted multiple pivots, but failed to achieve success.
Hyperliquid, a perpetual swaps DEX with no VC funding, has reached an all-time high of $92.56 on September 18, pushing its market cap past $30 billion. This contrasts sharply with the failure of Linera, which raised only $848,000 in its community token sale, despite being founded by former Meta engineers and led by a16z.
The VC model's limitations are becoming increasingly apparent in the crypto industry. Three structural flaws have been identified: time mismatch, incentive misalignment, and narrative depletion. Traditional VCs investing in SaaS companies typically have a 7- to 10-year window from seed round to IPO, but crypto projects have a compressed lifecycle of 18 months or less.
Hyperliquid's success can be attributed to its product-first approach, which prioritized development over marketing. It turned early users into token holders through its points system and subsequent HYPE airdrop. This means initial token distribution went to those who actually used the platform, rather than just check-writers.