As the cryptocurrency industry advances, more investors are getting aboard by funding different projects across the industry. A new wave of investment has seen higher capital values injected by various VC firms. But while governments are doodling about getting onto crypto, Paradigm, a top crypto VC firm, has announced its new $2.5 billion venture fund.
The fund becomes the biggest crypto venture fund so far having eclipsed the $2.2 billion fund that was recently announced by Andreessen Horowitz. Paradigm joins the elite VC firms that are exploring the crypto industry through much-needed funding. The funds will be used to develop solutions and improve on existing protocols to make the industry safer, faster, and more valuable.
Paradigm also has investments in other crypto companies and projects such as Coinbase, Maker, Uniswap, etc. The firm is changing the narratives from a previous interest in other technological advancements by increasing its capital injection into crypto-based projects. VC investments in cryptocurrency carry a significantly higher risk than in broader finance due to the present stance of governments on cryptocurrencies.
Paradigm announced the funding through a blog post on Monday. In the announcement, Paradigm’s co-founder said that the size of the fund is a reflection of how popular and exciting crypto technology is today. For a firm with only 30 employees and a 200% ROI between January and July this year, Paradigm surely owns its bonus in VC funding.
Crypto Investments Are Increasing
Despite the general caution to be “careful” and “wary” of cryptocurrencies, more investors are giving attention to the crypto market and pooling funds to back different projects. Andreessen Horowitz, another VC firm, injected $2.2 billion into a crypto start-up and made headlines for it. It tells a compelling story about the belief in crypto adoption in the near future. According to Paradigm’s co-founder, Matt Huang, he started Paradigm together with the other co-founder, Fred Ehrsam, because they believed that crypto start-ups will dominate in the future. Ehrsam is also the co-founder of Coinbase, the largest crypto exchange in the US. Huang also noted that the crypto industry has made a massive advancement in a comparatively short time and that they are ready to face the future applications of crypto. He said that any measurement of the success of crypto today must factor in the rapid adoption that it has enjoyed and also the intrinsic value of each token.
VC Firms, Crypto, and Regulation
In the US, thankfully, there is no ban on VC firms funding crypto projects but the government’s stance on cryptocurrencies is still a cause for concern to VC firms. Due to the risks of investments, VC firms could be in the red if certain government policies cripple the crypto industry. It is therefore important to them that the government adopts a friendlier stance on cryptocurrency.
But despite these issues, firms like Paradigm are willing to fund projects that will hasten the adoption of cryptocurrencies, create a healthier environment for investors, and of course return some healthy profits for them.
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