Crypto venture capital struggles as AI attracts talent, says Compound’s Dempsey
Crypto venture capital has been nearly dormant for nearly two years as artificial intelligence absorbs the tech world's attention and talent, according to Michael Dempsey, managing partner at venture firm Compound.
The Compound managing partner says crypto venture activity has been close to dormant for nearly two years while AI absorbs the tech world's attention. Dempsey made these remarks during an October 13, 2026 interview on the Empire podcast.
Talent migration
His explanation is straightforward: the builders who once chased crypto are now chasing artificial intelligence, and the money is following them. Dempsey described crypto venture activity as close to dormant, with the stagnation stretching back to 2024.
Back then, tech entrepreneurs streamed into crypto, eager to build on the next big platform.
Investment shift
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. Compound manages over $200M in assets and invests from seed stage through Series A across AI and machine learning, robotics, biotech and crypto.
Token incentives
Dempsey also pointed to a structural issue: token incentives. He acknowledged that tokenization carries real potential benefits but stressed that token incentives have struggled to deliver long-term alignment. The slowdown may indicate investor caution, with backers shifting toward projects with stronger fundamentals and away from speculative stories.
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