What is Paradigm Venture Capital? Investment Trend of Paradigm in H1 2022

Paradigm is one of the huge investment funds in the crypto market, having invested in many successful projects from 2017 to the present. Their enthusiastic support for projects not only in terms of finance but also in terms of product development, searching for users to help the project,… has created the success of many projects up to now.

What is The Paradigm VC?

Paradigm is an investment fund focused on supporting cryptocurrency projects. The investment method of the fund is a flexible, long-term investment, and multi-stage investment. They say they usually invest in the earliest stages when a project is just starting to take shape and will invest more in those projects in later stages.

Paradigm says that the fund has the ability to support the project in many ways, ranging from technical (mechanism design, smart contract security, engineering) to operational (recruitment, regulatory strategy).

Paradigm Team

The two founders of Paradigm, Fred Ehrsam and Matt Huang, first met at Coinbase’s Series B funding round with investment fund Sequoia. After talking for a few times and feeling relatively compatible in many aspects, together they founded Paradigm to invest in projects in the crypto market together. Here, I will tell more about the biography of each founder.

Fred Ehrsam

Fred Ehrsam is the co-founder of Coinbase . Previously, Ehrsam worked as a trader in the Securities Division at Goldman Sachs and in the Portfolio Analysis department at BlackRock. He holds a degree in Computer Science from Duke University.

Matt Huang

Matt Huang is the Co-Founder of Paradigm. From 2014 to 2018, Matt was a partner at Sequoia Capital, focusing on early-stage venture capital investments in mobile and internet companies, and leading the company’s investments in the space. electronic money sector. Prior to Sequoia, Matt was the Founding CEO of Hotspots, a company backed and invested by YCombinator, which was acquired by Twitter in 2012. 

Comment

As you can see, both founders of Paradigm are relatively early starters in the field of crypto as well as the investment field.

• As the co-founder of Coinbase, Fred Ehrsam’s relationship with the major hedge funds and industry builders is certainly good, and prior to co-founding Coinbase, he also had a long stint at companies. large financial company.
• Although Matt Huang started with crypto later (he said he started “really” with crypto in 2017), he has also been the founder of successful startups and invested and worked with many large funds. in a large investment fund and used to be an individual angel investor.

With such a huge profile in both technical and financial aspects, Paradigm has a high ability to help projects develop in many aspects as they promised.

Investment trends in 2021

Layer 2

• Cosmos
• Mina (by O(1) Labs)
• Optimism
• StarkWare

The number of Layer 1 projects invested by Paradigm is relatively small, only two projects. It seems that investing in blockchain platforms is not the strength of this investment fund. However, the two deals they invest in have also had relatively strong growth in recent years, as they have invested in these two projects since 2019. In investment rounds in layer 1, they are usually the leader. , and relatively early investment (Series A) at a low project valuation.

Paradigm also invests heavily in Layer 2 Rollups solutions such as Optimism or StarkWare. They invest multiple times (2 times in each deal), often leading those deals – a way to show their commitment to support these Layer 2 projects.

NFT/Metaverse/Gaming Project

• Zora
• AI Arena
• Axie Infinity
• Royal
• Fractional
• Parralel
• Showtime

Paradigm invested in NFT/ Metaverse/ Gaming a lot, and most of the deals are in the second half of 2021. There are three gaming deals: AI Arena, Parralel, Axie Infinity , there are two NFT Markets, Zora and Fractional, a project about Social Network.

Game deals are the most invested deals in this segment recently, when gaming projects spring up and Paradigm drops money to invest in many projects.

DEX/ CEX/ Derivatives/ Synthetic Asset Project

CEX projects:

• FTX
• Bitso
• CoinSwitch Kuber
• Tagomi

Paradigm’s investments in CEX exchanges have all been announced this year, with relatively “Mega” sizes, and are investment series when the exchange has been operating stably, has customers and operating models clearly.

DEX Projects:

• Uniswap
• Osmosis

Paradigm invests little in DEX exchanges, they only have two deals with a relatively modest amount of investment. Both projects receive investment when they have launched the protocol, released the product, and have a certain user file.

Projects in the Derivatives / Synthetic Asset segment

• dYdX
• Opyn
• Synthetix

Regarding Derivatives/ Synthetic Asset segment, Paradigm invests in leading projects such as dYdX for derivatives, Synthetix for Synthetic Asset, Opyn for Option. These are created projects that perform well and have a certain number of users, as well as the top of the array.

Investment trends in H1 2022

According to Dovemetric, a website that aggregates investments in the cryptocurrency market, in the first half of 2022, Paradigm only participated in 2 deals related to Web3.

1. Magic Eden – NFT Marketplace on Solana:
   Paradigm participated in 2 rounds of funding Series A ($27M) and B ($130M), in which, they took the lead in raising capital in Series A.
2. Wildcard – The ultimate video game spectator sport empowered by Web3
   Paradigm leads in Series A ($46M). This can be considered as the first game project that they invested with a relatively large amount of money.

As such, in 2022, Paradigm has limited the number of its investments to correspond to the downtrend crypto market. Their investment trend in 2022 is not enough to predict because they invest only two projects. Hopefully we will see more projects in the near future.

Verdict

Above is the Coincu team’s analysis of Pradigm VC, a fund with high diversification in its investments. In 2021, the fund focuses on many areas on the number of deals spread, but the investment money is focused on Ethereum and Layer 2 of Ethereum. In 2022, Paradigm only invests in two deals related to WEB3.

If you have any questions, comments, suggestions, or ideas about the project, please email ventures@coincu.com.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

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