VC Fund attracts $ 2.5 billion for crypto and Web 3.0 startups

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Venture capital is more bullish than ever in the cryptocurrency space. Crypto investment firm Paradigm has always backed top companies, such as Chainalysis, BlockFi, and Coinbase, as well as the decentralized trading protocol Uniswap, among others. Now the company is gearing up to support the next generation of crypto and Web 3.0 startups and protocols.

Paradigm founders Fred Ehrsam and Matt Huang raised $ 2.5 billion for their first venture capital fund, Paradigm One. It is the largest investment vehicle of its kind dedicated to the crypto and Web 3.0 space, according to the Financial Times. The fund ended up being twice as big as Paradigm had expected. Reddit co-founder Alexis Ohanian, who runs VC 776, applauded the massive transport.

New frontier

Huang, a former partner of Sequoia, called crypto and Web 3.0 the “most exciting frontier in technology,” while Ehrsam, who co-founded Coinbase, said it “has only just begun”. They made themselves accessible to what Huang described as “border builders” looking for funders.

While Paradigm only launched in 2018, it has amassed an impressive portfolio. They are active in supporting DeFi protocols, Bitcoin mining, stablecoin protocols, and Layer 2 scaling solutions on Ethereum.

Their first fund raised $ 400 million, which generated an IRR of more than 200% in the first six months of 2021, according to the Financial Times. Some successful Paradigm releases include Coinbase and DeFi Protocol Compound, according to Crunchbase.

The gigantic size of Paradigm’s new fund is a testament to both the increasing pace of innovation in the crypto and Web 3.0 spaces as well as the demand among venture capitalists and LPs to be part of it. The second-largest crypto-focused venture capital fund is managed by Andreessen Horowitz at $ 2.2 billion.

Adoption of cryptography

While cryptocurrency has come a long way, it is still a start in many ways. According to Paradigm, less than 10% of the world’s population owns crypto. And while the DeFi market has a total stranded value of over $ 250 billion, it remains pale relative to the size of the “traditional financial system,” Huang argues. Web 3.0 also has a long way to go before it achieves widespread adoption.

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