Crypto venture capital firm Paradigm is currently in discussions with investors to raise a substantial amount of money for a new fund. According to Bloomberg, the firm is aiming to secure between $750 million and $850 million. This comes as the crypto markets have experienced a resurgence in recent months.
If Paradigm is successful in raising $750 million, it would mark the largest raise in the crypto space since May 2022, when Andreessen Horowitz raised a record-breaking $4.5 billion. Paradigm’s previous raise of $2.5 billion in November 2021 was the largest cryptocurrency fund at the time.
Last September, it was reported that Paradigm was looking to raise a $1 billion fund. However, the firm has not yet responded to requests for comments on the current raise.
Paradigm has made notable investments in several Web3-related projects, including Coinbase, Fireblocks, Blast, Optimism, Uniswap, Gitcoin, and friend.tech. The firm recently led a funding round for Merkle Manufactory, the company behind the decentralized social network Farcaster, pushing its valuation over $1 billion and making it a unicorn.
However, not all of Paradigm’s investments have been successful. The firm invested $278 million in FTX, which later filed for bankruptcy. Paradigm wrote down its investment to zero just four days after the filing. Paradigm founder Matt Huang expressed regret for the investment and acknowledged the damage it caused to the ecosystem. He also noted that FTX only represented a small portion of the firm’s total assets.
In terms of the broader crypto venture capital landscape, fundraising for crypto projects hit a low point of $445 million in October 2023, according to RootData. However, there has been a notable increase in fundraising over the past three months, with March recording $1.16 billion.
The infrastructure and decentralized finance (DeFi) sectors received the most funding in 2024, with $1.14 billion and $459 million, respectively. Nonfungible token (NFT)-related VC funding experienced a significant drop in 2023, falling 92% from the previous year’s $3.4 billion to $281.3 million.
This decline in VC funding for NFTs aligns with the falling floor prices of major NFT collections. CryptoPunks and the Bored Ape Yacht Club, the two largest NFT projects by market cap, saw their floor prices decrease by around 63% and 90% from their highs in October 2021 and May 2022, respectively.
In conclusion, Paradigm’s negotiations for a new fund highlight the increasing interest and investment in the crypto space. Despite some setbacks, the industry has experienced significant growth in recent months, with increased fundraising and a focus on infrastructure and DeFi projects. However, the NFT sector has seen a decline in funding, mirrored by falling floor prices for major collections.