Coinbase Co-Founder's New VC Firm Paradigm Raises $2.5 Billion for Crypto Investments

Coinbase co-founder Fred Ehrsam and ex-Sequoia Capital Partner Matt Huang have raised $2.5 billion (roughly Rs. 18,598 crore) for a venture capital fund aimed at the “next generation of crypto companies and protocols” called Paradigm One, making it the biggest crypto VC fund. Paradigm One was launched in 2018 with an initial $400 million (roughly Rs. 2,976 crore), and the eventual amount raised is double the initial investment goal for the VC fund.

The size of Paradigm's fund highlights the anticipation of a major boom in the crypto industry among investors. “This new fund and its size are reflective of crypto being the most exciting frontier in technology. Over the past decade, crypto has come a long way,” Ehrsham and Huang wrote in a blog post on Monday. The three-year-old firm's fundraising overtakes VC firm Andreessen Horowitz's $2.2 billion (roughly Rs. 16,370 crore) fund earlier in 2021 amid record-breaking venture capital raising activity this year.

Paradigm invests in crypto startups big and small, valued at as much as $100 million-plus, down to $1 million (roughly Rs. 7.4 crore), the company's website says. The fund will invest in startups with "just a glimmer of an idea" as well as later-stage companies, Ersham and Huang said.

The San Francisco-based investment firm lists the decentralised finance (DeFi) space and Web3 applications, which refer to apps built on blockchain platforms, as two areas primed for investment.

In an interview with Financial Times, Ehrsam (who co-founded Coinbase) said token-based apps, in particular, have room to grow and that "decades into the future, it's very clear the largest entities in the world will be powered by tokens,” just as the world's biggest Internet companies are currently powered by networks.

As per market data provider Pitchbook, in the first three quarters of 2021, venture capitalists poured a record $21.4 billion (roughly Rs. 1,59,172 crore) into cryptocurrency and blockchain-focused companies across 1,196 deals — marking a five-time increase year-on-year.