Crypto Old Money Pivots: Paradigm Raises $1.2 Billion, Half Bet on AI and Robotics
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Crypto Old Money Pivots: Paradigm Raises $1.2 Billion, Half Bet on AI and Robotics
In the future, it might become increasingly difficult to follow top-tier VCs and solely bet on crypto.
Navigating Web3 tides with focused insightsAuthor: Claude, TechFlow
TechFlow Editor's Note: If you still think crypto VC is just money for buying coins, Paradigm's new $1.2 billion fund will make you recalculate. As one of the most capable institutions in the crypto circle managing nearly $12 billion, its fourth fund clearly directs capital into three lines: AI, robotics, and crypto. This comes against the backdrop of crypto receiving only $10.8 billion out of $510 billion in global venture capital in the first half of the year. Old money is voting with its feet; the question is whether it still values pure crypto projects.
On July 8, crypto VC giant Paradigm announced the completion of its fourth fund fundraising, with a size of $1.2 billion, expanding investments from crypto to AI, robotics, and other frontier technologies. This is the company's fourth fund and third venture capital fund since its inception.
Managing Partner Alana Palmedo wrote on the X platform that this $1.2 billion is to be invested in "steep exponential growth." Eight years ago, those who supported them believed in the crypto frontier; now they are doubling down on "colliding frontiers" such as AI, crypto, space, deep tech, and energy. Co-founder Matt Huang was quoted in an interview with Bloomberg saying that crypto is their first frontier and remains exciting, but there are too many things to ignore right now.
For the crypto industry, this is not a tactical adjustment by a small institution. Paradigm was founded in 2018 by Huang (former Sequoia partner) and Coinbase co-founder Fred Ehrsam. It is one of the largest VCs in the crypto field, managing assets close to $12 billion by the end of 2025. For such an institution that writes "crypto native" on its signboard to publicly divert half its ammunition to invest in AI and robotics is itself a signal.
$1.2 Billion Below Expectations, Half the Size of the Previous Crypto Fund
The figure of $1.2 billion is interesting only when viewed within Paradigm's own fundraising history.
The company raised a $2.5 billion crypto fund in 2021 and an $850 million early blockchain fund in 2024. This time, the $1.2 billion is more than half the size of the 2021 fund. More notably, according to a February report by The Wall Street Journal, Paradigm originally planned to raise up to $1.5 billion for this new fund; the final $1.2 billion landed about $300 million below the target.
Fundraising fell short of expectations, yet the direction is broader. Less money, but more sectors to invest in; the trade-off points to one thing: the single crypto sector can no longer hold the money top institutions want to invest.
For those holding crypto assets or following the primary market, the operational implication here is that the total amount of crypto ammunition from top VCs is shrinking. Early pure crypto projects may face a more selective and more fragmented capital pool in the future.
$510 Billion in VC Funding in First Half, Crypto Receives Only $10.8 Billion
The real reason for Paradigm's pivot lies in the capital flow of the entire industry.
According to Crunchbase data from July 2, global venture capital total reached $510 billion in the first half of 2026, creating a historical high for first-half investment, exceeding last year's full year total of $440 billion. The bulk of this money was taken by AI; just OpenAI and Anthropic accounted for more than 40% of the first-half financing amount. (Disclosure: Anthropic is the developer of TechFlow content tool Claude; data here comes from public reports, not provided by Anthropic.)
The situation of crypto during the same period forms a sharp contrast. According to Cryptorank data, VC funds flowing into crypto in the first half were only $10.8 billion, less than 2.5% of the global total. On one side is an AI financing explosion, on the other is cooling crypto investment; this is the direct background for Paradigm's decision to expand sectors.
Bloomberg's description is more straightforward; Palmedo described not a "either-or" trade-off, but an abundance of "too many things to invest in." The subtext is that Paradigm believes it has enough capital and research capability to invest in both, without sacrificing one to fulfill the other.
Crypto Not Abandoned, But Downgraded to "One of the Frontiers"
Both Palmedo and Huang repeatedly emphasized not abandoning crypto; this statement needs to be unpacked.
In the new fund investments listed by Paradigm, crypto still occupies an important position: decentralized derivatives exchange Hyperliquid, stablecoin public chain Tempo incubated jointly with Stripe, and prediction market platform Kalshi. In terms of open-source tools, continued investment in Ethereum development tools Foundry and Reth. These are the most active themes in crypto today: decentralized trading, stablecoin infrastructure, and regulated event markets.
But the list of non-crypto investments is equally long: autonomous drone delivery company Zipline, rapid manufacturing platform SendCutSend, space defense startup True Anomaly, and Nous Research which does open-source AI (developer of Hermes Agent). According to CoinDesk, among the projects already invested by the new fund, Zipline's valuation reached $7.6 billion in January this year, and True Anomaly's valuation was $2.2 billion in April.
Huang's stance is that crypto and AI are not a zero-sum competition; there is significant overlap between the two. Paradigm also specifically pointed out a cross-project EVMbench, which is a blockchain security benchmark test developed in collaboration with OpenAI. (Disclosure: OpenAI is a competitor of Anthropic.)
For crypto practitioners, the signal here is that even in the eyes of the most steadfast crypto VCs, crypto has changed from "the only sector" to "one of the frontiers." The dilution of capital and attention is a fact; whether this is good or bad for specific projects depends on whether they step on the intersection of crypto and AI.
Not Just Paradigm, Crypto Old Money Collectively Expands Scope
Paradigm is not an isolated case; in recent months, crypto VCs have collectively moved beyond crypto.
According to Bloomberg, in May, crypto VC Haun Ventures raised $1 billion, expanding into AI for the first time while supporting crypto startups. In June, Framework Ventures raised $400 million for its fourth fund, investing in crypto as well as AI, robotics, and energy. Along with this Paradigm case, three top crypto VCs independently included AI in their investment scope within two months.
Behind this expansion lies both defense and offense. On the defensive side, the crypto market has become more institutionalized, more regulated, and more concentrated on a few large platforms; early-stage projects capable of absorbing large VC checks are decreasing. On the offensive side, AI and robotics are creating a new cycle of company creation, and the scale and urgency are exactly what VCs want.
For those wanting to enter the crypto primary market, this trend means that following top VCs in the future may make it increasingly difficult to bet solely on crypto. These institutions are treating crypto as part of a "frontier tech stack," not the whole. The next big company incubated by them might not fall under the crypto category at all.
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