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Crypto venture capital is contracting sharply, but Lattice Fund partner Regan Bozman argues rivals fleeing to AI are walking into a far harder game.
<h2 id="bozman-s-three-path-map">Bozman's Three-Path Map</h2>
Bozman laid out his thesis in a post republished this week by <a href="https://www.techflowpost.com/en-US/article/31299" rel="noopener noreferrer nofollow">TechFlow</a>, sketching how crypto investors are splitting into three camps as capital thins.
Some are leaving venture entirely. Others are quietly broadening their mandate beyond digital assets, often without formal LP sign-off. A smaller group, including Lattice, is choosing to sit tight.
Bozman pointed to Paradigm, once a pure-play crypto fund, now branding itself around <a href="https://www.theblock.co/post/368051/the-funding-why-raising-a-crypto-vc-fund-is-harder-now-even-in-a-bull-market" rel="noopener noreferrer nofollow">frontier</a> technologies, and to Kyle Samani as a manager whose track record lets him follow interest wherever it leads.
Also Read:<a href="https://yellow.com/news/ethereum-2450-breakout-make-or-break" rel="noopener noreferrer nofollow">Ethereum Nears $2,450 Showdown As Bulls And Bears Split On Next Move</a>
<h2 id="why-ai-pivot-is-risky">Why AI Pivot Is Risky</h2>
The most common exit route is artificial intelligence, a sector Bozman described as the most competitive venture market in two decades, with business models still unclear. In his own words, Bozman said crypto VCs rushing into AI are "courting death," while those holding the line "will feast."
Crypto funds pivoting there face AI specialists, every generalist firm, and essentially every risk capital pool on earth. Bozman doubts most have any real edge.
His warning lands in a crowded field. Dragonfly Capital managing partner Haseeb Qureshi recently <a href="https://www.coindesk.com/business/2026/02/17/crypto-venture-capital-firm-dragonfly-raises-usd650-million-despite-gloom-of-a-bear-market" rel="noopener noreferrer nofollow">closed</a> a $650 million fund calling financial crypto use cases "exploding" even as non-financial ones fail. a16z crypto partner Arianna Simpson told The Block the AI boom has pulled talent and attention away from crypto deals.
Bozman's stance comes as Bitcoin<a href="https://yellow.com/asset/btc" rel="noopener noreferrer nofollow">(BTC)</a><a href="https://yellow.com/news/btc-tops-79000-11-week-high-volume-surge" rel="noopener noreferrer nofollow">trades near $79,000</a> after losing almost half its value from the October 2025 record above $126,000, a drawdown that has wiped more than $1.4 trillion from total market cap and thinned LP appetite across the sector.
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Crypto VCs Fleeing To AI Are "Courting Death," Lattice's Bozman Says

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