Entropy, a cryptocurrency startup backed by Andreessen Horowitz, announced its shutdown, refunding investors after a lack of venture-scale business viability, as stated by CEO Tux Pacific on X (formerly Twitter).
The closure highlights challenges in the cryptocurrency funding landscape, with a 60% year-on-year decrease in venture capital deals, reflecting broader uncertainty in the early-stage crypto sector.
Entropy, a startup founded by Tux Pacific, announced its closure and return of funds to investors after raising $27 million. Despite multiple pivots and layoffs, it faced challenges in achieving venture scale within the shifting crypto landscape.
The decline in funding has hit early-stage ventures like Entropy, reflecting 2025’s challenging funding environment that saw a significant decrease in crypto venture capital deals.
Entropy to Refund Investors After $27 Million Funded Shut Down
Founded by Tux Pacific, Entropy announced its closure and return of funds to investors. Despite multiple pivots and layoffs, the startup couldn’t achieve “venture scale” within the crypto industry’s shifting landscape.
Tux Pacific, a cryptography expert, aimed to create a decentralized alternative to centralized custodians. The recent pivot focused on crypto automation, but financial challenges prompted the shutdown after raising approximately $27 million.
Funding Decline Hits Early-Stage Ventures Like Entropy
Investors including a16z, Coinbase Ventures, and others will receive refunds. The decision reflects 2025’s challenging funding environment, which saw a significant decline in crypto venture capital deals, impacting early-stage ventures like Entropy.
The closure of Entropy highlights issues concerning venture scalability in crypto. With funding dropping by about 60% year-on-year, startups find it difficult to secure early-stage investment without clear market traction or established business models.
Investor Preferences Shift to Late-Stage Crypto Enterprises
Returning capital to investors isn’t common but isn’t unheard of, particularly when startups face unpredictable market conditions. Historical trends show that investors now prefer backing late-stage enterprises with proven growth trajectories.
As reported by Kanalcoin, the current situation echoes previous downturns where crypto ventures face challenges scaling up under market pressures. Long-established investors like Fly Ventures have noted a strategic shift towards more conservative investment strategies.
Tux Pacific, Founder and CEO of Entropy, announced the shutdown on X, stating that after “four years, multiple pivots, and two layoffs, the business model lacked ‘venture scale.'” – source
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