Overview of Paradigm Investment Fund & Investment Trends
Analysis of investment style and investment portfolio of Paradigm investment fund.
Paradigm is one of the largest 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 financial terms but also in terms of product development, searching for users to help the project,… has created the success of many projects up to now. present.
So what is Paradigm investment fund? What projects does Paradigm’s portfolio include? What is the investment style of Paradigm? Learn all about Paradigm through the following article.
Introducing Paradigm Fund
Paradigm is an investment fund focused on supporting cryptocurrency projects. The investment method of the fund is flexible, long-term investment, 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 is capable of supporting the project in many ways, ranging from technical (mechanism design, smart contract security, engineering) to operational (recruitment, regulatory strategy).
Paradigm team in crypto
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 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 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.
In 2014 (29741), Ehrsam was honored as one of the 30 people under the age of 30 who changed the world by TIME court. That same year, he was also included on Forbes’s 30 Under 30 show.
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.
Matt is also a personal angel investor in companies like Toutiao and Instacart, and bought his first Bitcoin in 2012. Matt graduated in Mathematics from the Massachusetts Institute of Technology.
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 (97173)), he has also been the founder of successful startups, invested and worked by 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 is highly capable to help the development projects in many aspects as they promised.
Overview of the Portfolio of the Paradigm Foundation
You can check out Paradigm’s portfolio through the image below. Next, we will take a look at a few outstanding projects of each Sector.
Most of the projects mentioned below already have informative articles on idolmeta.net, if you are interested in any project, you can search for the project name to learn more!
Layer 1 and Layer 2 projects
Layer 1 projects invested by Paradigm (besides Bitcoin and Ethereum):
- Cosmos: Tendermint is the labs behind the Cosmos Hub and the Cosmos ecosystem. In March 2019, Paradigm led a $9 million investment in Tendermint in Series A, with participation from Bain Capital, 1confirmation and many other VCs.
- Mina (by O(1) Labs): In April 2019, Mina Protocol successfully raised $15 million from funds, led by Coinbase and Paradigm. This is the Series A of the project.
- Optimism: A Layer 2 Optimistic Rollups Solution for Ethereum. In January 2020, Optimism raised $3.5 million from Paradigm, IDEO CoLab Ventures. In February 2021, Optimism continued to successfully raise $ 25 million in Series A, led by a16z, and with the participation of Paradigm.
- StarkWare: Another Layer 2 Ethereum solution, using the ZK-Rollups solution, with projects under development on Layer 2 including dYdX, Sorare, and Immutable,… March 2021, project funded The $75 million Series B venture was spearheaded by Paradigm, with participation from Three Arrows and Alameda Research. In November 2021, the project continued to announce the successful funding of Series C, successfully raising $ 50 million, at a valuation of $ 2 billion, led by Paradigm.
⇒ Comment: As you can see, 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 times, 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 dedicated support of these Layer 2 projects.
Project NFT/ Metaverse/ Gaming
NFT/ Metaverse/ Gaming projects include:
- Zora: A marketplace for NFTs on Ethereum. The project was invested by Paradigm in March 2021 in Strategic Round, with an undisclosed investment amount.
- AI Arena: ArenaX Labs has completed a $5 million Seed Round funding, led by Paradigm and the framework’s involvement. This is a fighting game building labs on Ethereum that are in development.
- Axie Infinity: In early October 2021, Axie Infinity was invested $152 million in Series B, led by a16z and with participation from multiple funds including Paradigm.
- Royal: An Ethereum-based NFT Music app called Royal raised a $16 million seed round from Paradigm and Founders Fund in August 2021. In November 2021, Royal again announced a successful Series A funding round led by a16z, with participation from Paradigm, Founder Fund, NEA’s Connect Ventures, Crush Music, Coinbase Ventures.
- Fractional: In August 2021, Fractional completed an $8 million seed round, led by Paradigm, with participation from Divergence Ventures, Flamingo DAO, Variant Fund, and Delphi Ventures. This is an innovative project in the field of NFT as the leader in breaking down NFT into parts for trading.
- Parralel: In October 2021, an NFT scifi game called Parralel successfully raised $50 million, at a valuation of $500 million, invested by Paradigm.
- Showtime: Showtime is a Social Networking project for NFTs, which successfully raised $7.6 million in seed round, led by Paradigm in October 2021.
⇒ Comment: As you can see, Paradigm invests in NFT/ Metaverse/ Gaming a lot, and most of the deals are in the second half of 2021. Of which 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 sprung up and Paradigm dropped money to invest in many projects.
Project on DEX/ CEX/ Derivatives/ Synthetic Asset
Projects in the CEX segment that Paradigm invests in include:
- FTX: In July 2021, FTX exchange successfully raised $900 million at a valuation of $18 billion, with participating funds including Paradigm, Sequoia Capital, Ribbit Capital, Third Point, Lightspeed Venture Partners, Coinbase Ventures, Softbank, Sino Global Capital, Multicoin Capital.
- Bitso: In May 2021, Bitso exchange successfully raised $250 million, at a valuation of $2.2 billion in Series C.
- CoinSwitch Kuber: In January 2021, CoinSwitch Kuber exchange successfully raised $15 million Series A, led by Ribbit Capital and Paradigm.
- Tagomi – Unknown: In March 2019, Paradigm participated in a capital raising deal for Tagomi with a value of 12 million USD, including the participation of Pantera Capital. This is a platform to buy and sell top coins for institutions. Following this, Tagomi was acquired by Coinbase in 2020.
Projects in the DEX array that Paradigm invests in include:
- Uniswap: In July 2020, Uniswap exchange successfully raised 11 million USD from a16z, Union Square Ventures, Paradigm and ParaFi Capital.
- Osmosis: In October 2021, Osmosis announced a $21 million investment from Paradigm, Robot Ventures, Nascent, Ethereal, Figment and Terraform Labs CEO Do Kwon. Paradigm led the funding round. This is a DEX on the Cosmos ecosystem.
The projects in the Derivatives / Synthetic Asset segment that Paradigm invests in include:
- dYdX: In June 2021, dYdX announced to receive a $65 million investment in Series C led by Paradigm. Participating funds include CMS Holdings, CMT Digital, Electric Capital, HashKey Capital and StarkWare.
- Opyn: In February 2021, Paradigm led a $6.7 million funding round, with the participation of Dragonfly, Synthetix co-founder Kain Warwick and Stani Kulechov – founder of Aave.
- Synthetix: Coinbase Ventures, Paradigm and IOSG invested $12 million in Synthetix in a funding round of the project in February 2021.
- Paradigm’s investments in CEX exchanges were all announced this year, with relatively “terrible” sizes, and are investment series when the exchange has been operating stably, has customers and operating models. clear.
- 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.
- Regarding the 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, and are at the top of the array.
Project about Lending
Projects in the Lending segment invested by Paradigm include:
- Compound – Series A: In November 2019, $25 million was invested in Series A for Compound, spearheaded by a16z, with participation from Polychain Capital, Paradigm Capital and Bain Capital Ventures.
- Yield Protocol – Seed & Series A: This fixed-rate lending project led by Paradigm in a $10 million Series A investment round with the participation of Framework Ventures, Symbolic Capital Partners, CMS Holdings, Variant, and DeFi Alliance and June 2021.
- MakerDAO: In December 2019, MakerDAO sold $27.5 million of MKR tokens to Dragonfly Capital and Paradigm at a valuation of $500 million.
- Euler – Series A: In August 2021, Paradigm spearheaded an $8 million Series A Euler investment with participation from Lemniscap and many other individual investors in the market.
- Jet Protocol – Extended Seed: In early November 2021, Jet Protocol – lending money market on Solana – successfully raised capital in an expanded seed round worth $6.8 million, with the participation of Paradigm, Reciprocal Ventures, Solana Ventures and many more other funds.
- Reflexer: A stablecoin issued by an insurance asset, ETH. They have been invested in the seed round by Paradigm since February 2021.
BlockFi – Series D: In March 2021, BlockFi successfully raised $350 ($14306) million at a valuation of $3 billion. This is a centralized lending application for crypto assets.
- Leading funds include Bain Capital Ventures, Pomp Investments and Tiger Global, with participation from Valar Ventures, Breyer Capital, Susquehanna Government Products, Jump Capital and Paradigm.
⇒ Comment: In addition to the two investments in top protocol lending in the crypto market, MakerDAO and Compound from 2019, the remaining transactions in lending protocol are from February 2021 onwards.
This shows that recently they have invested in Lending in DeFi a lot, after having “bet” in two top tier lending applications since 2019 (at a valuation of 500 million USD, now multiplied by 4-5 times compared to the previous year). with the milestone they invest).
In addition, they also invested in the BlockFi centralized lending application in a relatively late series, when the project was established and operating stably.
Infrastructure projects invested by Paradigm include:
- Tendermint – Series A: Tendermint is the labs behind Cosmos Hub and the Cosmos ecosystem. In March 2019, Paradigm led a $9 million investment in Tendermint in Series A, with participation from Bain Capital, 1confirmation and many other VCs.
- Skynet Labs – Strategic: In March 2020, Paradigm and investment funds such as Bain Capital Ventures, Bessemer Venture Partners, A.Capital, Collaborative Fund, Dragonfly Capital Partners, Hack VC, INBlockchain, First Star Ventures invested 3 million USD in Skynet Labs, the project behind the hosting platform Sia network.
- Gauntlet Network – Seed: In October 2020, Gauntlet Network successfully raised $4.3 million led by Paradigm. This is an infrastructure piece that helps develop the decentralized governance of DAOs.
- Chainanalysis – Series D: In March 2021, Chainanalysis successfully raised $100 million in Series D at a valuation of $2 billion. It is a data platform to provide data to projects, users and organizations.
Erasure Bay: A decentralized market for data serving the prediction market, invested 11 million USD by Placeholder and Paradigm in March 2019.
- Flashbot: A project to research and reduce the negative impact of MEVs on Ethereum, invested and financially supported by Paradigm to develop. It is not clear how much money they are supported by Paradigm, but Paradigm is the sole financial partner of the project.
- Keep Network: A project to bridge BTC into Ethereum for use in the Ethereum ecosystem, and also a security layer solution used for blockchains and allows users and applications to store data privately. They were invested $7.7 million in April 2020, with the participation of Paradigm Capital at the forefront, Fenbushi Capital, Collaborative Fund attending.
⇒ Comment: Paradigm’s infrastructure investments have spread from 2019 to the present. The number of infrastructure pieces that Paradigm invests in is not much when compared to other large investment funds such as 3AC, a16z,…
Currently, I do not see the common characteristics of the above infrastructure projects, so I do not understand what Paradigm’s “investment thesis” in this infrastructure segment is. I will update more when I have more information or in-depth analysis.
Project on Services for End User
Projects in the Services segment for end-users invested by Paradigm include:
- TaxBit – Series B: In August 2021, TaxBit successfully raised $130 million at a valuation of $1.33 billion in Series B of the project. The deal was led by IVP and Insight Partners, including participation from Tiger Global, Paradigm, 9Yards Capital, Sapphire Ventures, Madrona Venture Group.
- Diem – Seed: Diem completed a funding round of unknown value in March 2020, with the participation of Paradigm.
- MoonPay – Series A: At the end of November 2021, MoonPay announced the completion of Series A funding deal of $555 million, at a valuation of $3.4 billion. The deal was spearheaded by Tiger Global Management and Coatue, with participation from Blossom Capital, Thrive Capital, Paradigm, and NEA.
- Matrixport – Unknown: In December 2019, Matrixport completed a funding round with the participation of Paradigm at unknown valuation, unknown amount.
- Fireblocks – Series B: In November 2020, Paradigm led a $30 million Series B, with participation from Cyberstarts, Tenaya Capital, Swisscom, Galaxy Digital, Digital Currency Group (DCG), and Cedar Hill Capital. In this investment, Fred Ehrsam also joins the board of directors of the Fireblock project.
- Argent – Series A: In March 2020, Argent announced it had completed a $12 million Series A funding round, spearheaded by Paradigm and featuring the Compound founder. This is a wallet application for storing and trading decentralized crypto assets.
⇒ Comment: Investment deals in services for end users are invested by Paradigm in many areas, from payments to wallets, taxation and many others.
Investment deals are also at various stages of projects, from series A, B,… with small deal sizes, to large deals like MoonPay ($555 million at $3.4 billion valuation). .
Paradigm’s investment period also stretches from the end of 2019 to the present time, proving that they have maintained a constant interest in this end-user application segment throughout the investment period.
Investments in other areas of Paradigm include:
- BetDEX: In November 2021, BetDEX was invested $21 million in seed round by Paradigm and FTX. This is a decentralized football betting application.
- Genesis Digital Assets: This is a Bitcoin mining firm, they were invested by Paradigm in September 2021. The deal, valued at $431 million, includes participation from NYDIG, Stoneridge, FTX, Ribbit, Electric Capital, Skybridge, and Kingsway Capital. In addition, Matt Huang also joined this firm as one of the company administrators.
- Lido: The first and largest staking solution on the market at the moment. In May 2021, $73 million was raised in a Treasury Diversification round. Paradigm purchased $51 million in LDO tokens (15,120 ETH), while the remaining $22 million was invested by Coinbase Ventures, Three Arrows Capital, Jump Trading, Alameda Research, Digital Currency Group.
- Amber Group – Series A: In February 2020, Amber successfully raised $28 million in Series A funding led by Pantera, Paradigm, and attended by Polychain Capital, Blockchain.com, Coinbase Ventures and Fenbushi Capital. This is a startup with many crypto products and services providing to many audiences in the market.
- Gitcoin: In April 2021, Gitcoin successfully raised $11 million from many large investment funds including Paradigm, 1kx, Electric Capital, IDEO, The LAO, MetaCartel Ventures, Naval Ravikant, Balaji Srinivasan.
- Namebase: Project about domains working on Handshake blockchain, invested by Paradigm and INBlockchain in November 2018 in the project’s seed round. The amount of the project receiving investment is currently unknown.
- Spacemesh: In September 2018, Spacemesh received a $15 million investment, led by Polychain, with participation from MetaStable, Paradigm, Coinbase Ventures, Bain Capital, 1kx, Arrington XRP Capital, Danhua Capital, Gumi Crypto, Electric Capital , Collaborative Fund.
Reviews & Reviews of Paradigm
Looking at Paradigm’s portfolio, you can see the following characteristics through Paradigm’s portfolio:
- They invest in many different areas, not focusing on a particular application.
- And they invest in both centralized and decentralized projects, at various stages of projects (from seed to Series A, B, C, D,…).
- They do not have the strength to invest in Layer 1, as evidenced by their relatively small number of Layer 1 deals, but they bet on Cosmos, Mina and two Rollups solutions.
- Most of the applications, Dapps they invest in are on Ethereum or Layer 2 of Ethereum. This shows their strong belief in the development of Ethereum and applications on this potential platform.
In mid-November 2021, Paradigm has just completed a $2.5 billion funding round to continue investing in upcoming crypto deals – $300 million larger than the $2.2 billion fund that a16z announced in mid-January. 6/2021.
This is not only a clear sign that money is flowing strongly into the crypto market, but also shows how terrible Paradigm is to raise such a large amount of capital to continue investing and operating.
The relationship between Paradigm and other investment funds
Because Fred Ehrsam was a co-founder of Coinbase, when it came to building Paradigm, the relationship of Paradigm and Coinbase Ventures seemed relatively good, as many of Paradigm’s early deals involved Coinbase Ventures.
In addition, I do not have any other information about the relationship of Paradigm and other large funds in the market.
Paradigm Portfolio Review
Most of the projects invested by Paradigm already have products and tokens. The top 5 projects with the best performing Tokens (current price compared to the starting price of 2021) are:
- ETH (Ethereum): 500%.
- SC (Siacoin): 430%.
- ATOM (Cosmos): 300%.
- UNI (Uniswap): 270%.
- KEEP (Keep): 230%.
Investment trends of Paradigm in 2021
As you can see, this year, the segment Paradigm invested the most is NFT, Metaverse, Gaming. They also invest in many applications in the CEX, DEX and Derivatives segment (they continue to invest in leading projects in the segments), many lending applications on different platforms, not just focusing on Ethereum as before.
Layer 2 Rollups solutions are also noticed and invested by them: Optimism and StarkWare.
Above is an overview of the Portfolio and some comments on investment trends of Paradigm, if you have any other questions or comments, please comment below to discuss with me and the idolmeta.net team !