Venture capitalists are capitalizing on the recent resurgence of the cryptocurrency market as they rush to raise new funds. Paradigm, a crypto-focused firm co-founded by Fred Ehrsam, the co-founder of US-based crypto exchange Coinbase, and Matt Huang, a former partner at Sequoia Capital, is reportedly in discussions with investors to secure between $750 million and $850 million for its latest fund.
According to a Bloomberg report on the issue, if successful, this financing round would be the largest in the industry since the market crash.
Paradigm Aims To Surpass $1 Billion Target
The crypto venture capital landscape experienced a significant setback following a steep downturn in digital asset prices after May 2022. However, Paradigm aims to leverage the current market recovery and investor confidence to raise substantial capital for its new fund.
In 2021, Paradigm raised a record-breaking $2.5 billion fund, which was the largest-ever crypto investment vehicle at the time. In September, reports emerged that Paradigm was targeting a $1 billion fundraise. The current discussions indicate that Paradigm is seeking to surpass that goal.
Last year was an eventful one for Paradigm. Per the report, the company faced criticism over the summer when it temporarily removed references to cryptocurrency from its website, raising concerns about its commitment to the industry. However, it quickly rectified the situation by reinstating the crypto-focused content.
In October, Fred Ehrsam moved from managing partner to general partner at the firm. In addition, Matt Huang testified at the trial of Sam Bankman-Fried, the co-founder of FTX, a crypto exchange in which Paradigm had invested $278 million. Huang stated that Paradigm was unaware of fraudulent practices at FTX and subsequently wrote down its investment to zero.
Despite these setbacks, the report notes that Paradigm has remained active in supporting crypto projects. The firm recently led an investment round in Merkle Manufactory, a company responsible for developing the software infrastructure for the Farcaster social media network.
This funding round reportedly valued Merkle Manufactory at approximately $1 billion, indicating Paradigm’s continued belief in the potential of the crypto industry.
Venture Firms Flock To Crypto
According to Bloomberg, Paradigm is not alone in seeking to raise funds within the crypto space. Other venture firms, such as Hivemind Capital, are actively raising specialized funds, such as a $50 million non-fungible token (NFT) fund.
Hack VC, which announced a $150 million fund in February, is also looking to raise at least $100 million for another investment vehicle. These efforts highlight the growing interest and confidence within the venture capital community towards the crypto industry.
Overall, Paradigm’s ongoing discussions to raise between $750 million and $850 million for a new fund underscore the renewed optimism in the crypto market. With the industry recovering from the previous downturn, venture capitalists are eager to capitalize on the opportunities presented by the resurgent market.
Featured image from Shutterstock, chart from TradingView.com