The firm, co-founded by Coinbase co-founder Fred Ehrsam and former Sequoia partner Matt Huang, is looking to tap into institutional interest in the space following a bear market lull in VC investing.
It would be one of the largest new crypto VC funds raised since the market downturn last year, according to an April 3 Bloomberg report citing anonymous sources.
The peak for crypto VC fundraising came in May 2022, when venture firm Andreessen Horowitz (a16z) raised a $4.5 billion fund.
Crypto VC Comeback
Paradigm previously raised a record $2.5 billion crypto fund in 2021 during the bull market peak. However, the firm faced scrutiny last year for appearing to deemphasize and reduce commitment to crypto in a pivot to AI on its website.
Additionally, it invested $278 million in FTX before marking it down to zero after the exchange’s collapse, and it is part of a lawsuit alleging it lent “legitimacy” to the embattled platform.
Despite these setbacks, Paradigm has continued to back crypto projects, including leading a $1 billion investment round in the software powering the decentralized social media platform Farcaster.
In addition to Paradigm, Mike Novogratz’s Galaxy Digital is raising $100 million for a crypto venture fund, according to Bloomberg.
Previously, the firm invested its own money into various crypto, infrastructure, and DeFi startups. However, in 2023, Galaxy Digital started Galaxy Ventures Fund I and opened it to outside investors.
In a statement on April 3, the firm said:
“For years, we’ve been putting our own capital behind these innovators. Now we’re launching Galaxy Ventures Fund I LP to partner with outside investors, allowing us to continue fueling the digital asset ecosystem by backing promising early-stage companies,”
Crypto VC season appears to be here, with Hivemind Capital raising a $50 million NFT fund and Hack VC, which announced a $150 million fund in February, looking to raise another $100 million for another investment vehicle.
Top 10 Crypto Fundraising Rounds in Q1 2024
Let’s take a look at the top 10 biggest private crypto fundraising rounds completed in Q1 2024, backed by major crypto venture investors including @a16zcrypto, @multicoincap, @hiFramework, @PanteraCapital, @Hack_VC, @paradigm,… pic.twitter.com/hznuGW6dX9
— TOP 7 ICO | #StandWithUkraine🇺🇦 (@top7ico) April 2, 2024
VC Ecosystem Outlook
There were a total of 180 publicly announced investment projects in the crypto venture capital space in March, according to Wu Blockchain’s monthly roundup. This figure is up 24% from February 2024.
Moreover, the total financing amount for March was $1.16 billion, up 53% from the previous month.
Ethereum layer-2 network Optimism Foundation made the largest raise of $89 million by selling 19.5 million OP tokens to private investors.
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