Venture Funds Pivot to Privacy and Infrastructure in Web3 Investments
While crypto hype cools, institutional investors are targeting composability, scalability, and privacy in blockchain infrastructure
The venture capital ecosystem for digital assets is undergoing a quiet transformation, marked by a redirection of capital away from speculative bets and toward foundational technologies. While public discourse around cryptocurrencies remains volatile, a more deliberate investment narrative is emerging: long-term, infrastructure-centric plays with an eye on scalability, privacy, and machine-to-machine transactions.
"There’s a lot of money on the sidelines," said Jamie Burke, Founder and Executive Chairman of Outlier Ventures. "But a lot of capital is still being deployed—just more selectively. We're seeing it flow into mega-rounds rather than early-stage bets."
These "mega-rounds" refer to large, late-stage venture funding rounds that typically exceed $100 million and are often led by strategic or institutional investors. Unlike seed funding, which backs early-stage concepts, mega-rounds typically support more established companies ready to scale significantly.
The lion's share of venture funding is now concentrated beyond Series A rounds, backing strategically vital ventures, particularly those building blockchain infrastructure. Amid the bearish climate, investors are still supporting scalability solutions, cross-chain composability, and technologies that facilitate real-world use by autonomous agents.
One trend gaining traction is infrastructure that enables privacy on public ledgers—a critical issue for enterprise adoption.
"Privacy is a big thing at the moment," Burke said. "If we're looking to bring on a lot of institutional counterparties to carry out various transactions on what are effectively public ledgers—well, how do you allow for greater levels of privacy to protect what is effectively IP or proprietary knowledge about their business and market?"
Burke pointed out the emerging complexity of the blockchain ecosystem.
"There continues to be this kind of multi-chain environment with greater levels of complexity, and there continues to be this kind of rolling up of functionality," he explained.
"So rather than trying to build a new functionality into the lower layers of infrastructure, what people are doing is allowing things to be kind of rolled up into higher order layers of infrastructure, which allow for more affordability, more efficiency."
With the rise of autonomous agents capable of performing complex economic tasks, such foundational layers are becoming central to Web3's evolution.
Web3 refers to the next generation of the Internet, built on decentralized blockchain technology. This system's users own their data, and transactions occur without traditional intermediaries. These agents, driven by recursive learning and high autonomy, require infrastructure that allows seamless, trustless, and programmable interactions.
Institutional Timelines Are Lengthening
Jamie Burke offered insight into how Web3's changing nature is shifting investment horizons. Speaking at the Digital Assets Summit in London on May 6, he observed that liquidity timelines are moving closer to traditional venture cycles.
"There was a time when you could go from a SAFT [Simple Agreement for Future Tokens] to liquidity in six months. That era is largely gone," Burke said. "Now, even when you receive tokens as a private investor, they may not be liquid for up to a decade."
Outlier Ventures, which does not operate under the conventional GP/LP structure, has the flexibility to ride out these longer cycles.
"We don't have the same pressure to return capital within ten years," Burke noted.
Still, he emphasized the challenge of holding valuable digital assets that aren't immediately monetizable.
The changing environment is altering liquidity expectations and how investors evaluate opportunities.
"You might make a wonderful investment, but you might have to wait multiple cycles to become liquid. So you could make an investment which, in theory, is worth hundreds of millions, but it is not vested for you, or the liquidity depth isn't there," Burke said.
He also highlighted that new funds continue to enter the market even as existing funds hold tens of billions in undeployed capital.
This creates a paradoxical situation: heightened caution but persistent commitment to Web3's long-term trajectory.
Betting on Agentic Infrastructure
For Outlier Ventures, the next generation of investments lies in real-world integrations: decentralized compute, AI, and tokenized physical infrastructure. These sectors intersect the digital and physical economies and are expected to generate tangible economic flows.
"We broadly invest in a small set of categories that have long-term viability and will ultimately generate an equivalent of a real-world income that feeds into the network or something else," Burke said. "So real-world assets are one of them, decentralized AI and decentralized physical infrastructure."
"Decentralized compute is a bet on: are we going to need more compute? And might some distributed forms of those be more effective and affordable?" he added.
In this vision, blockchains serve as the transactional and contractual foundation for autonomous agents carrying out network functions.
Burke also emphasized the importance of robust token design, especially as more users become agents rather than individuals. "The problem with people is they're generally illogical and irrational and just follow these hype cycles and memetics. But if you design a token-incentivized system well for agents, they will play that game for those rewards."
Outlier's investment in Wormhole is a case in point. Rather than a classic seed investment, it was a strategic partnership to support the ecosystem and encourage adoption by third-party developers.
"That partnership was taking a stake in their network and then investing in teams that are building using Wormhole technology," Burke explained, "but it was broadly based with an investment around things like privacy and zero-knowledge technology."
Toward the 'Post-Web' Era
Burke concluded with a provocative thesis: Web3 is not a continuation of the current internet but a radical departure from it.
"What we've been building over the last decade isn't Web3, as people can't really use it. It is an upgrade to the internet, so we're referring to it as the post-web."
He argues that the true beneficiaries of this new infrastructure will be agents—digital assistants capable of handling everything from trip planning to financial contracting. These agents will rely on Web3 components like smart contracts, decentralized exchanges, and programmable incentives to operate efficiently.
"We're delegating more tasks to AI, and that trend isn't slowing. The question is: how can they transact and contract trustlessly and autonomously?" Burke asked. "For that, all roads lead to Web3."
Many of today’s digital experiences still rely on shortcuts—brand trust, repeated app use, or centralized platforms—because humans seek convenience. However, Burke envisions a world where agents remove these limitations. "The large majority of consumer internet we'd rather not be doing, and we would prefer to delegate. The point becomes, how can we trust that that is being carried out? How can there be provenance in what happens?" he said.
Outlier Ventures' long-term strategy underscores this shift from human-centric design to machine-native functionality. If the 'post-web' thesis holds, the coming years may be less about flashy apps and more about the quiet expansion of digital infrastructure built for a new class of users: autonomous agents with economic agency.
"Much of the web as it is today is disintermediated. You no longer need it. You only need a set of APIs. You need a semantic player and a way for them to transact and contract," Burke concluded. "The shifts will be happening. How do you go to the final mile - transaction - rather than just query and discovery?”