Posted on Nov 15, 2021, 7:41 PMUpdated Nov 15, 2021, 8:42 PM
As bitcoin flirts with all-time highs, investors are rushing to fund the next generation of cryptocurrency projects. The investment firm Paradigm has just raised $ 2.5 billion, double its initial objective, for Paradigm One, its first venture capital fund in the crypto field. The fund, created by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang, thus becomes the largest venture capital fund that a new team has ever raised.
This is not the first time that a fund dedicated to cryptos has managed to double its objective, recalls the “Financial Times”, which fears that such exploits will fuel speculation around a sector bubble. Earlier this year, venture capital firm Andreessen Horowitz had already blown the counters by raising $ 2.2 billion. It was so far the “largest cryptocurrency fund ever raised.”
Like Andreessen Horowitz, Paradigm relies on the proliferation of applications based on ethereum, a decentralized exchange protocol that allows users to create smart contracts, which automatically perform money transfers.
“This is probably little compared to where we will be in ten years,” Fred Ehrsam told the British daily. The founders of Paradigm focus on decentralized finance (DeFi) and applications based on digital tokens.
Success of the first fund
In a post on their site, Fred Ehrsam and Matt Huang explain that despite their 2018 desert journey when they founded Paradigm, they have always believed that cryptos would be “one of the most important technical and economic changes. decades, with the potential to fundamentally change the currency, the financial system (DeFi) and more broadly the Internet (Web3) ”. Nothing less.
Paradigm’s first fund, which initially raised $ 400 million in 2018, has grown to as high as $ 10 billion, fluctuating with crypto prices. It had an annual internal rate of return of over 200% until the first half of this year.