Paradigm Plans New Raise of up to $850M Amid Crypto Market Revival
Summary:
Cryptocurrency venture capital firm Paradigm is reportedly aiming to raise a new fund of up to $850 million, capitalizing on the recent recovery of crypto markets. The fundraising comes as Paradigm continues investing in Web3 firms and succeeds a significant previous funding round of $2.5 billion in November 2021. The VC firm recently elevated decentralized social network, Farcaster, to a billion-dollar valuation, despite experiencing a major setback with a failed $278 million investment in the now-bankrupt FTX. Notably, while other crypto sectors observed substantial funding, VC funding in the NFT sector dramatically dropped by 92% in 2024.
According to insiders, Paradigm, a cryptocurrency venture capital firm, is rumored to be aiming for a new fund raise of $850 million. The firm is currently in negotiation with investors for a potential fund of between $750 million and $850 million, capitalizing on the recent bounceback of cryptocurrency markets, as per Bloomberg's April 3 report. It could be the largest funding round in the sector since May 2022, when the record-setting $4.5 billion was amassed by Andreessen Horowitz, a Silicon Valley-based VC firm.
The raise, if successful, would mark Paradigm's biggest since November 2021, when they managed a staggering $2.5 billion fund during the peak of the previous bull cycle - the biggest cryptocurrency fund at the time. Back in September, The Information had reported that Paradigm aimed to raise a $1 billion fund.
Paradigm, which is known for its investments in Web3 enterprises such as Coinbase, Fireblocks, Blast, Optimism, Uniswap, Gitcoin and friend.tech, recently catapulted Merkle Manufactory - the engine behind decentralized social media platform Farcaster - to unicorn status. A Paradigm-led financing round put Merkle Manufactory's value at over $1 billion. Furthermore, Paradigm invested $278 million in FTX, a now bankrupt entity, and had to slash the investment's value to nil just four days after Sam Bankman-Fried's exchange filed for bankruptcy.
Paradigm's founder and managing partner, Matt Huang, expressed regret over the FTX investment that led to significant disruption in the ecosystem. However, he noted that FTX constituted merely a minor percentage of Paradigm's total assets.
As per RootData, crypto project-based VC fundraising touched its lowest in October 2023, just $445 million - the weakest monthly performance since December 2020. Yet, the subsequent three months have witnessed a steady rise, recording $1.16 billion in March. Over the period of January 2020 to April 2024, infrastructural projects and the decentralized finance (DeFi) sectors attracted the most funding in 2024, totaling $1.14 billion and $459 million respectively.
However, the non-fungible token (NFT) industry's VC funding saw a concerning dip last year, amounting only to $281.3 million, a stinging 92% drop from the high of $3.4 billion in 2022. This tallies with the declining floor prices of major NFT collections. The values of CryptoPunks and Bored Ape Yacht Club, the two prominent NFT projects by market cap, have decreased around 63% and 90% from their highs in October 2021 and May 2022 respectively, as data from NFT Price Floor indicates.
Published At
4/3/2024 3:16:15 AM
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