The intersection of crypto and artificial intelligence (AI) has entered a quieter and more selective phase, according to two prominent venture capitalists.
Canonical Crypto’s Anand Iyer and Spartan Group’s Kelvin Koh described the current climate as a post-hype moment for decentralized AI protocols, with capital and talent moving toward more focused, utility-focused applications at the Hong Kong Consensus 2026.
“I think we’re in a trough right now,” said Iyer, whose San Francisco-based company supports early-stage infrastructure and applications built on decentralized networks. “We’ve been through a frothy period. Now it’s about figuring out where the real strength lies.”
Iyer and Koh have criticized what they see as overinvestment in GPU markets and attempts to create decentralized alternatives to large AI models like those from OpenAI or Anthropic. The capital required, Koh noted, is “day and night” compared to what is available in crypto.
Instead, they see the potential for purpose-built full-stack solutions, tools that start with a specific problem and build up to the model, compute, and data layers.
Iyer highlighted that startups are avoiding expensive SaaS tools and using AI to build custom internal systems in days. “Speculation will no longer determine the product,” he said. “We need to think about the users first.”
Both investors highlighted the importance of proprietary data, regulatory advantages or go-to-market advantages as new forms of competitive moats.
For founders looking to raise capital, Koh offered some blunt advice: “Twelve months ago, it was enough to have a wrapper on ChatGPT. That’s not true anymore.”
