Crypto VC Firm Paradigm Aims High with $850M Investment Drive

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Leading crypto venture firm Paradigm aims to raise $850M for investments amidst a market resurgence, reflecting growing optimism and increased fundraising activity in the crypto industry.

Paradigm's Ambitious Fundraising Plans

According to sources familiar with the matter, cryptocurrency venture firm Paradigm is in discussions with investors to secure between $750 million and $850 million for a new investment vehicle. If successful, this endeavor would mark one of the largest funds raised since the crypto market downturn in May 2022.

A Closer Look at Paradigm’s Investments

Paradigm, co-founded by Fred Ehrsam, a co-founder of Coinbase, and Matt Huang, a former partner at Sequoia, previously amassed $2.5 billion for a fund in November 2021. This fund was designated for investments in crypto companies and protocols. Despite the sizable investment, not all ventures proved profitable, with Paradigm's $278 million investment in the collapsed crypto exchange FTX being a notable setback. Consequently, the firm wrote off its investments in FTX entirely.

Paradigm currently leads the funding round for Merkle Manufactory, the entity behind the Farcaster social network. Additionally, the firm maintains investments in prominent crypto firms like Coinbase, Blur, Compound, dYdX, and Citadel Securities.

Market Context

Following the crypto market's peak in May 2022, subsequent months witnessed a decline alongside digital asset prices. In January, VC investment in the crypto sector plummeted to $9.5 billion, significantly lower than the previous year's figure. This downturn was attributed to various scandals and regulatory challenges that hindered fundraising efforts.

However, the news of Paradigm’s new crypto fund emerges amidst a bullish period in the industry, catalyzed by the approval of spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC). This positive sentiment has also spurred an increase in venture capital funding for crypto projects, with March witnessing a remarkable 52.5% month-over-month surge in VC investments.

Market Resurgence and Other Fundraising Efforts

Paradigm is not the only crypto-focused venture capital firm that is making the most of the recent resurgence in crypto markets, as more venture capital firms are seeking to raise funds. Notably, Hivemind Capital is in the process of raising a $50 million NFT fund, while Hack VC aims to secure at least $100 million following its announcement of a $150 million fund in February.

According to Managing Partner Alex Pack,

“With millions of users and regulatory clarity emerging across the world, it is clear that Web3 is here to stay. Yet, like the early days of the internet, Web3 still requires an infrastructural paradigm shift in scalability, security and usability before it is ready for mainstream usage.”

VC investors, both in the crypto and AI sectors, are increasingly prioritizing infrastructure projects. This strategic shift fits with Web3's growth, with a focus on improving scalability, security, and usability for mainstream adoption. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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