Paradigm to Launch $15B Fund Targeting AI and Crypto Convergence

First, solve an arithmetic problem.

A venture capital firm manages $12.7 billion in assets. Its most recent fund raised $850 million. The fund before that raised $2.5 billion.

The direction is reversed.

The scale is shrinking, not because it can't raise funds, but because there aren't enough worthwhile assets to invest in. To reverse this trend, where should this company look for its next large enough pool of capital?

On February 28, 2026, The Wall Street Journal reported that cryptocurrency investment firm Paradigm is raising a new fund of up to $1.5 billion, expanding its focus to artificial intelligence, robotics, and other cutting-edge technologies.

This was not a sudden decision. It was an arithmetic problem that had been calculated long ago, and the answer is simply being revealed today.

In 2025, global cryptocurrency venture capital investment reached $49.8 billion. That sounds like good news. But looking at this single number alone could lead to a misjudgment.

That same year, the number of crypto VC deals plunged by approximately 60% year-over-year, dropping from around 2,900 to 1,200. More money was flowing in, but fewer projects were receiving it. Capital entering the crypto space became increasingly concentrated in a small number of large deals, rather than being spread across hundreds of early-stage projects.

For the vast majority of small and medium-sized funds, this may not be an issue. But for Paradigm, it’s a structural challenge. Paradigm manages $12.7 billion in assets and is one of the world’s largest crypto-exclusive venture capital firms. Its problem isn’t finding projects—it’s finding enough large, early-stage projects capable of deploying capital at this scale while maintaining its expected returns.

In 2021, Paradigm raised the largest cryptocurrency fund in history, totaling $2.5 billion. In 2024, it announced its third fund, sized at $850 million—just one-third the size of its previous fund.

This contraction is not a sign of weakness, but an active adaptation to a narrower market. However, it also highlights one thing: relying solely on crypto, Paradigm is struggling to find a path forward that matches its scale.

To understand today’s $1.5 billion, you must go back to November 2022.

That month, FTX collapsed. Sam Bankman-Fried’s empire crumbled within days, burning through the funds of countless institutions. Paradigm’s paper investment on FTX amounted to $278 million—and ultimately vanished to zero.

For a top-tier institution known for its research-driven approach and technological insight, this is not just a bad debt—it is a public misjudgment that requires explanation to LPs, to the market, and to itself.

What happened afterward seemed strange at the time. In 2023, people noticed that Paradigm’s official website had quietly changed: all instances of “crypto” and “Web3” were removed and replaced with the more neutral term “technology investments.”

This change was not officially announced, but was quickly noticed by the community and sparked intense discussion. The biggest concern was: Is Paradigm leaving?

Co-founder Matt Huang had to step in to quell the backlash. He tweeted that Paradigm has "never been more excited about crypto," adding, "The advancements in AI are too significant to ignore. Framing AI and crypto as a zero-sum competition is a popular but incorrect narrative. We disagree. Both are fascinating, and there will be substantial overlap."

This is a public relations clarification, but it also reveals a true fact: within Paradigm, AI is already being seriously considered.

After FTX, the question everyone is forced to ask is: What do you bet on for the next decade?

If you only look at Paradigm’s official announcements, the company’s transformation appears to have begun today. But if you examine Matt Huang’s actual actions over the past two years, you’ll see he has long since ceased to be just a crypto investor.

In 2024, Paradigm invested $50 million in Nous Research, an AI infrastructure company focused on researching and developing open-source large language models. This was not a small, exploratory bet—$50 million represents a serious commitment from Paradigm.

In February this year, Paradigm jointly released EVMbench with OpenAI, a benchmarking tool for evaluating the ability of different AI models to detect and patch security vulnerabilities in smart contracts. The core infrastructure of cryptocurrency met the assessment of AI capabilities—two things placed on the same table.

Meanwhile, Matt Huang is also building another company: Tempo, a stablecoin payment infrastructure firm. His role as a co-founder aligns closely with his position on Stripe’s board. In 2025, Stripe established a strategic partnership with Paradigm and also launched its own stablecoin payment product that year.

Looking at this together, Matt Huang isn't "about to invest in AI"—he has already been living at the intersection of AI and crypto for at least two years.

He isn't betting on AI or crypto alone—he's betting that these two will collide at some point. And when AI agents begin executing transactions on-chain, and robots require a programmable monetary system, that collision point becomes Paradigm’s next front line.

Paradigm's entry into AI does not mean it is competing with a16z or Sequoia for the same projects.

There’s a common narrative mistake here: interpreting Paradigm’s new fund as merely “another VC shifting to AI.” But if that were all it were, it would have no advantage—the general AI space is already saturated with traditional VC giants possessing deeper backgrounds and stronger resources.

Paradigm's true strategy is: it doesn't intend to compete for the general AI market; instead, it aims to bet on the overlapping space that others haven't yet recognized.

AI agents are one of the hottest concepts today. These autonomous intelligent agents have begun replacing humans in various scenarios: searching, writing code, analyzing data, and managing workflows. But there’s one thing they haven’t solved yet: money.

When an AI agent needs to make payments, receive funds, or transfer money between services, what does it use? PayPal? Bank accounts? These systems were designed for humans, requiring identity verification and manual authorization, and are incompatible with the logic of autonomous machine execution.

But stablecoins can. Smart contracts can. Programmable money can.

That’s why Matt Huang is simultaneously building Tempo (a stablecoin payment system) and investing in Nous Research (AI infrastructure): he believes these two paths will eventually converge, and Paradigm is positioned to bet on both sides and capture maximum returns at the moment of convergence.

This isn’t a transformation; it’s an expansion—into a space he believes others haven’t fully understood yet.

There is also a practical aspect that must be clearly explained.

Paradigm’s LPs—those institutions and individuals entrusting it with their capital—saw its fundraising ambitions shrink from $2.5 billion in 2021 to a more restrained $850 million in 2024.

The vast difference in size between the two funds requires an explanation—and even more importantly, a compelling narrative for the next fund.

Continuing to invest in early-stage crypto projects is no longer enough to justify a $1.5 billion fundraising goal in 2024. But leveraging crypto’s technological advantages to enter the cutting-edge tech space during the peak of AI and robotics—this can.

In 2025, 61% of global VC funding, totaling approximately $258.7 billion, flowed into the AI sector—the largest pool in today’s venture capital landscape. Paradigm’s $1.5 billion raise aims to draw from this pool, rather than continue relying on a shrinking lake. For LPs, this represents a larger narrative and a more credible growth story.

We can now return to 2023. That year, when Matt Huang was forced to clarify the website redesign incident, he said: “AI and crypto are not zero-sum competitors.”

At the time, this statement felt more like a defense—an attempt to reassure the community, prevent LP panic, and leave room to explore AI. But if read in today’s context, it sounds more like a forewarning.

Paradigm spent three years rebuilding from the ashes of FTX. Instead of taking the easiest path—scaling down, focusing solely on crypto, and waiting for the next bull market—it chose a harder but more expansive route: betting on the convergence of AI and crypto, establishing a presence in both fields, and waiting for them to collide.

Today’s $1.5 billion fund represents a milestone along this journey to this point.

Matt Huang has not yet publicly responded to today’s Wall Street Journal report. However, Tempo is still under construction, Nous Research is still operational, and EVMbench has already been released.

He doesn't need to explain. Those actions have said more than any statement ever could.