Dragonfly Capital Closes $650 Million Fund IV Above $500 Million Target Amid VC Slump, Reaffirms Focus on Stablecoins and DeFi Infrastructure

Fourth Fund Matches 2022 Vintage as Firm Calls Current Cycle Depressed and Bets on Early-Stage Financial Primitives

TL;DR

• Dragonfly Capital closed Fund IV at $650 million on February 17, 2026, exceeding its $500 million target.
• The raise matches its 2022 $650 million Fund III despite a broad crypto VC downturn.
• Managing Partner Haseeb Qureshi called it “the firm’s biggest bet yet that the crypto revolution is still in its early innings.”

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Dragonfly Capital announced on February 17, 2026 that it had closed Dragonfly Fund IV with $650 million in committed capital, surpassing its original $500 million fundraising target. The final close matches the size of the firm’s third fund, also $650 million, which was completed in 2022 prior to the prolonged downturn that followed the Terra-Luna collapse and a broader contraction in digital asset markets.

The fundraising comes during what industry participants have described as a venture capital slump across crypto markets, with year-over-year deal activity and capital formation declining sharply as token valuations and the broader crypto price index remain under pressure. 

Managing Partner Haseeb Qureshi described Fund IV as “the firm’s biggest bet yet that the crypto revolution is still in its early innings,” and said nearly every Dragonfly vehicle had been raised during downturn conditions. Qureshi previously noted publicly that prior bear-market vintages later ranked among the firm’s strongest performing funds, citing Fund I during the 2018 ICO winter and Fund III ahead of the 2022 market dislocation.

Dragonfly stated that Fund IV will prioritize blockchain-based financial infrastructure rather than cyclical token speculation, with core areas including stablecoins, decentralized finance protocols, prediction markets, tokenized real-world assets and payments infrastructure. The firm has invested previously in projects such as Ethena, Rain, Mesh and Polymarket, reflecting its thesis around foundational on-chain financial primitives.

Ethena’s synthetic stablecoin has grown to an approximate market capitalization of about $6.3 billion, and Dragonfly led its $6 million seed round in 2023. The project later secured participation from traditional financial institutions including Franklin Templeton and Fidelity, according to prior disclosures cited in coverage of the fund close.

General Partner Tom Schmidt has framed the firm’s strategy as focused on products tied to finance, payments, asset issuance and market infrastructure rather than short-term token cycles. Rob Hadick wrote on LinkedIn that the firm had navigated industry turbulence including FTX and Terra-Luna while maintaining conviction in blockchain-based financial systems, referencing its long-term investment philosophy in core financial use cases.

Dragonfly said Fund IV will deploy capital across both early-stage and later-stage opportunities aligned with its infrastructure thesis. The firm’s ability to close a vehicle of this size during a period marked by extreme fear readings and suppressed crypto price activity has positioned it among a limited group of crypto-focused venture firms raising large pools of capital during the current cycle.

Reporting around the close characterized the raise as one of the larger dedicated crypto venture commitments of the 2025–2026 period. Dragonfly did not disclose a detailed allocation breakdown for the new vehicle but reiterated its emphasis on stablecoin ecosystems, DeFi stack components, tokenization frameworks and on-chain financial services platforms.

It happened as Brevan Howard’s BH Digital Asset fund experienced a challenging year in 2025, recording a decline of 29.5%, its worst since launching in 2021. This downturn followed two years of significant gains, with returns of 43% in 2023 and 52% in 2024. At the year's start, the fund managed $2.4 billion, primarily impacted by losses in crypto markets and tech stocks due to AI-driven disruptions. 

The broader institutional landscape mirrored this decline, with many crypto hedge funds suffering double-digit drawdowns. In 2025, leadership transitioned as Gautam Sharma departed, replaced by Chris Rayner-Cook. Despite these setbacks, the fund continued investing in venture rounds for emerging firms. Conversely, Brevan Howard's Master fund performed better, gaining nearly 1% in 2025 and over 4% in January 2026, showcasing the risk disparity between crypto-focused and diversified strategies.

This article has been refined and enhanced by ChatGPT.