Topline
Cryptocurrency-focused investment firm Paradigm announced Monday morning it has raised $2.5 billion from investors for the largest cryptocurrency venture fund ever, surpassing the $2.2 billion raised by Silicon Valley monolith Andreessen Horowitz earlier this year as the nascent market’s meteoric highs help early-stage crypto firms nab record amounts of cash.
Fred Ehrsam and Matt Huang in the offices of Paradigm, the crypto-asset investment firm they ... [+]
Key Facts
In a Monday announcement, Paradigm managing partners Fred Ehrsam, who cofounded Coinbase, and Matt Huang, a former Sequoia Capital partner, said the new fund will invest alongside the firm’s flagship fund in cryptocurrency companies across all stages and geographies.
Reflecting the wave of investor interest, the fund surpassed the $1.5 billion target Paradigm set when it first started raising the money last month and launched less than five months after Andreessen Horowitz made waves with its third crypto fund—the largest in the space at the time.
The San Francisco-based investment firm listed the $100 billion decentralized finance space and so-called Web3 applications, which refer to apps built on blockchain platforms, as two areas ripe for investment.
In an interview with Financial Times, 33-year-old Ehrsam 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.
Paradigm launched in 2018 and has since amassed as much as $10 billion in assets, with investments in about 40 crypto firms, including exchanges Coinbase and FTX Trading.
Key Background
The explosion in value of cryptocurrencies during the pandemic has ushered in a wave of record investments for the booming space. In the first three quarters of this year, venture capital firms poured more than $21 billion into cryptocurrency startups across more than 1,100 deals, roughly five times the volume one year prior, according to PitchBook. The fervor has thus far culminated with FTX landing crypto’s biggest fundraising round ever, raising $900 million from investors in July.
Big Number
$4.4 billion. That’s how much Ehrsam is worth, according to Forbes. The former Goldman Sachs currencies trader left Coinbase in 2017 but remains on the board and still owns about 6% of its stock.
Further Reading
10 Largest Venture Rounds In Crypto And Blockchain (Forbes)
Coinbase co-founder launches biggest VC fund in crypto (Financial Times)
How Coinbase Ventures Became One Of Crypto's Busiest VCs—Without Any Full-Time Staff (Forbes)
