Galaxy Research’s VC Vital Signs report (Oct 23) highlights a crypto funding paradox in Q3 2026: startup valuations hit a record high, while median deal size fell 40%. Three key takeaways: 1. Early-stage deals remain active. Pre-seed rounds accounted for ~25% of deals, versus 24% for late-stage companies. These figures reflect deal counts, not capital invested, so they don't mean pre-seed attracted more funding. 2. Valuations rose as deal sizes shrank. VC-backed crypto company valuations reached ~$90M, the highest in the tracked dataset. Meanwhile, median deal size dropped from $5M in Q2 to $3M in Q3, down 40%. These metrics measure different things: valuation reflects a company's agreed value during fundraising, while deal size measures the capital raised. The divergence may indicate that funds still accept high valuations but are more cautious about how much they deploy. Changes in the composition of companies surveyed could also affect the data. 3. VC funding isn't token market inflows. Most deals involve company equity or private investment agreements, with different valuations, allocations and unlock schedules. Rising startup valuations don't automatically translate into higher token FDVs, nor do they prove a new altcoin bull cycle has begun. If this trend continues, crypto startups may still raise at relatively high valuations, but with smaller rounds and greater pressure to use capital efficiently. Source: Galaxy Research, VC Vital Signs, Oct 23, 2026.