Jsquare’s Joanna Liang on Crypto VC, Web3 and Onchain Finance

The crypto venture market is recovering, but the rebound is increasingly concentrated in established companies: Galaxy Research says VCs deployed $5.6 billion across 384 deals in Q2 2026, with 78% of capital going to later-stage startups, while only five new crypto venture funds were raised, the lowest quarterly count since Q3 2019. Yet Joanna Liang, Founding Partner at Jsquare, sees the shift differently from a conventional market slowdown, arguing that it represents a reset that can create opportunities for dedicated early-stage investors rather than a decline in innovation.

This interview explores why Jsquare is maintaining its Web3 focus while much of the venture industry turns toward AI, how Joanna Liang evaluates founders and emerging sectors, and why she believes global on-chain finance could become a core part of the financial system over the next five to ten years.

Capital rebounded in Q2, but it went mainly to later-stage companies, and the number of new venture funds raised was the lowest since 2019. How do you read this from the position of an early-stage fund? Have you made new investments in recent months, and in what areas?

I see this as a market reset rather than a decline in innovation. AI has attracted significant capital and talent, and many crypto VCs have shifted their focus. That creates opportunities for dedicated early-stage investors like us, because we face less competition and more attractive valuations. That is what I have seen over the past two years.

Since launching our $50 million fund in 2025, Jsquare has invested in 17 Web3 projects, typically with checks of around $1 million. They focus on on-chain trading, lending and borrowing, RWA, prediction-market settlement and similar areas. We have also invested in later-stage companies such as Kraken and BitGo, with larger checks of over $5 million per project. I believe the next wave of crypto growth will be driven by real financial adoption, not just token speculation.

Many funds have pivoted to AI lately. Where does AI fit within your Web3 focus?

Jsquare’s focus remains on Web3. Even when investing in AI-related companies, we look for companies that solve problems within the Web3 ecosystem. A recent example is Nebula Security. Its thesis is that AI makes cyberattacks more sophisticated, and the growing amount of capital held on-chain will create significant demand for security solutions. Our team approached them proactively. We invested because they address on-chain security problems. 

They have already uncovered several significant vulnerabilities, including but not limited to:

• More than 700 Linux kernel zero-day vulnerabilities;
• More than 10 Chrome and Firefox zero-day vulnerabilities, etc.

Among the investments from Jsquare’s first years, which are you most pleased with? How has your approach changed since then?

It is hard to pick just one. I started Jsquare in 2021 with my own capital and have invested in over 100 projects so far. My strategy has evolved around two complementary opportunities.

The first is regulated financial infrastructure, such as Circle, CoinList, FV Bank, Kraken and BitGo. I believe credible, compliant institutions are essential for bringing crypto to mainstream adoption. The second, which excites me more, is financial and technological innovation. Pudgy Penguins, Metis and Big Time have shown how ambitious founders can keep adapting and exploring new opportunities in Web3.

In our new fund, we invested at the earliest stage in Mog, a perpetual DEX similar to Papertrade. It lets users trade stocks and crypto assets with 1,000x leverage.

What I’ve learned from all these projects is that great founders matter more than their original business plans, because they can adjust product plans and find new product-market fit as market conditions change.  

Which founder traits do you look for that are hard to see in a pitch? Which have proved most predictive?

Three: integrity, genuine passion for the mission, and adaptability.

Integrity comes first. I’ve learned from past investments that a brilliant founder without integrity can be a very costly mistake for a fund. On passion, I like founders who truly love what they are building, not just chasing the next hot narrative. Narratives change fast, and you cannot build something lasting without genuine passion. Adaptability has been one of the strongest predictors. Markets change very fast, especially in crypto, and the best founders can admit what they did wrong, learn quickly and pivot.

How do you distinguish a short-term trend from a durable business? Which early signals do you rely on?

I start with a simple question: will people still use this product after the hype has gone? For on-chain finance, which is my main focus now, I look at real users, retention, transaction volume, revenue and security. If people keep coming back without token incentives, that is a strong sign of product-market fit. I would call that a durable business that can get through bear and bull markets.

I am more cautious about blockchain-based AAA gaming, social apps and shopping. They need seamless user experiences, and blockchain doesn’t yet add enough value in those sectors.

Meme tokens are the biggest attention-grabber among retail investors, and I find them very interesting. I believe meme trading is a recurring phenomenon: every cycle, attention returns, many tokens rise, and people keep trading. But most individual meme tokens are short-lived. Attention will always come back, but the hype around each token usually doesn’t last. Real demand can create durable businesses. Catching attention for a short while creates only temporary opportunities.

When you evaluate an investment, how much weight do you give the project itself compared with its environment, including regulation, jurisdiction and market timing? What gives you enough confidence to commit?

It depends on the sector. For payments and other regulated financial services, jurisdiction, licence and banking access come first. Without them, payments is a risky business, and even a great product cannot scale without a viable regulatory path. For innovative on-chain products, I place more weight on the team and the underlying mechanism. Take Mog, which I mentioned: it explores a different model for leveraged trading and liquidity provision. Its core innovation is a treasury that builds liquidity from trading activity, enabling markets to operate without traditional order books or external market makers. I find such financial innovation fascinating because it can create entirely new sources of alpha.

Ultimately, what gives me confidence is a strong team, a real market need and a compelling risk-reward. I am willing to take technology risk, but not to compromise on integrity or accept structural risk.

Which trends across AI + Web3, PayFi, DeFi and RWA do you expect to matter most over the next year? Is Jsquare planning to add or drop any verticals?

I am very bullish on global on-chain finance over the next 12 to 18 months, especially stablecoin payments, on-chain trading, lending and borrowing, and prediction markets. I think these sectors will see the fastest adoption, with regulation in place in the US. I am also very excited about AI-powered security: as more capital moves on-chain, security becomes more crucial.

Traditional finance is moving on-chain very fast, and RWA is a big topic with huge long-term potential, especially tokenized stocks. When I last read the data, they had reached around $3.4 billion, and I expect them to grow exponentially over the next few years. Growth may be slower for non-standardized RWA products such as real estate and local on-chain products, because liquidity and distribution are still big challenges there.

Custody is growing too, and regulated custody is another big theme. BitGo, one of our portfolio companies, has over $65 billion in assets on its platform. We also invested in Walapay, a PayFi business that connects stablecoins with traditional banking systems for faster, cheaper cross-border payments. The company announced a few months ago that it had already processed $2.5 billion.

I am not planning to drop any major verticals. I will focus more capital on areas showing real adoption, strong revenue growth and clear value capture.

What time horizon do you plan around, from first investment to return, and is five years realistic?

This is a five-year fund, so my goal is to return capital to investors within five years. From a broader perspective, I would love to see some projects survive at least two or three market cycles, which is five to ten years.

Crypto investments can exit through token liquidity, acquisitions or public listings. Which exit route do you expect to matter most for the portfolio? What would count as a successful outcome?

Our portfolio spans a range of potential exit routes. Jsquare takes a long-term investment approach, with exit opportunities depending on each company’s development, market conditions, and available liquidity events. For early-stage DeFi and on-chain finance products, token liquidity will likely be the main route. For payments, security and AI + Web3 startups, such as Walapay and Nebula Security, we see potential for strategic acquisitions or eventual IPOs over the long term. We have already seen Circle and BitGo have gone public, and I am looking forward to a potential Kraken IPO.

Success means two things to me. First, delivering real returns to my LPs and outperforming Bitcoin over this market cycle. Second, seeing portfolio companies solve real problems and sustain themselves for at least five to ten years, staying relevant for years to come.

Suppose capital were not a constraint and you could write a check far larger than your usual size into one company with a five-to-seven-year horizon. Which kind of company would you choose? Why?

For larger-scale crypto exposure, Bitcoin would always be my first choice. Among other assets or companies, I would pick a market leader in on-chain finance, especially in trading or lending, such as Uniswap and Aave, which are already the biggest leaders in their sectors. I believe on-chain financial activity will grow massively over the next five to ten years, especially when US regulation becomes clearer and more real-world assets move on-chain. I would like to own a meaningful stake in such leaders, as a benchmark at least 2% of total FDV.

Looking ahead three to five years, what are Jsquare’s priorities? What investment thesis do you want the firm to be known for?

Over the next three to five years, my priority is to build a strong track record by identifying and backing exceptional early-stage companies, while working toward meaningful returns and distributions for our LPs from our first fund. We still have capital to deploy, and we believe disciplined investing and strong performance should come before any new fundraising.

Our long-term investment thesis is global on-chain finance. I believe crypto will reshape how value is owned, transferred, and accessed. Stablecoins and tokenized real-world assets will become core infrastructure for global finance, and we want Jsquare to be at the forefront of this transformation.