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.
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 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.
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.