Paradigm Secures $850M for Third Crypto Fund

Paradigm, a prominent venture capital firm, has recently concluded its third fund aimed at early-stage investments in the crypto and blockchain sectors. The firm announced on June 13 that it had successfully raised $850 million for this new fund. This remarkable amount marks one of the largest fundraising efforts in the history of cryptocurrency funds. This fundraising effort has been in discussion for several months, spurred on by the recent recovery in the crypto markets.

Matt Huang, co-founder and managing partner at Paradigm, expressed the firm’s long-standing belief in the significance of crypto. “When we founded Paradigm in 2018, we believed that crypto would be one of the most important technical and economic shifts of the coming decades. Six years later, that belief has only gotten stronger,” he stated. This conviction underpins Paradigm’s continued and expanded investments in the cryptocurrency domain.

Over the years, Paradigm has built a diverse portfolio, investing in various notable crypto companies. Some of the prominent names include Coinbase, Fireblocks, Blast, Optimism, Uniswap, MakerDAO, Chainalysis, MoonPay, Gitcoin, and Friend.tech. Not all investments have been successful. The firm also put in $278 million into the now-defunct crypto exchange FTX. Following the collapse of FTX in November 2022, Paradigm wrote down its investment to zero.

Speculation about the size of Paradigm’s new fund had been circulating for several months. In September 2023, reports surfaced suggesting the firm was aiming to raise $1 billion. By April, sources indicated that Paradigm was discussing with investors the possibility of raising between $750 million and $850 million. The latter figure became the final amount raised, showcasing strong investor interest and confidence in Paradigm’s strategy.

This $850 million fund is the most substantial raise for Paradigm since it closed a $2.5 billion fund in November 2021. The scaled-back target compared to previous raises might suggest a more conservative approach, reflecting lessons learned and current market conditions. It confirms the robust and growing interest in the crypto and blockchain domains.

The overall trend in venture capital investment in crypto and blockchain startups has seen a significant increase. Galaxy Research data reveals a notable influx of investments, with $2.49 billion being poured into 603 deals in the first quarter of 2024 alone. This represents a 29% increase in funding and a 68% rise in deal volume compared to previous periods.

Another venture capital firm, Pantera Capital, is also gearing up for a substantial new fund. The company is seeking to raise more than $1 billion for a new fund designed to offer exposure across a broad range of blockchain assets. Pantera’s fund is slated for launch in April 2025, underscoring the sustained investor interest in the evolving crypto space.

Paradigm’s successful closure of its $850 million fund highlights the continued and deepening engagement of venture capital in the cryptocurrency and blockchain sectors. Despite market volatility and specific setbacks, the growing volume and value of investments indicate a strong belief in the transformative potential of these technologies.