Crypto was Paradigm's first big bet. Now the market is slumping - Bitcoin tumbled nearly 30% this year. According to Crunchbase, during Q2 of this year AI companies captured 70% of total startup investment worldwide. So Paradigm is shifting gears.
The venture capital firm has secured a new $1.2 billion fund that will target opportunities beyond crypto, specifically in artificial intelligence and robotics. Paradigm was founded in 2018 by Matt Huang and Fred Ehrsam, who also co‑founded Coinbase, a public crypto exchange. In its early years, the firm built a strong reputation backing blockchain startups and even co‑created the Tempo payments blockchain with Stripe. Matt Huang also leads Tempo.
The move makes sense. At the same time, AI is on fire.
Get your free investing masterclass bonus when you join Market Briefs, our free daily newsletter
Managing partner Alana Palmedo put it plainly: "Crypto was the first frontier for us, and it continues to be a really exciting one. "But there's so much else happening right now that's pretty hard to ignore"."
The firm's pivot is part of a larger trend among crypto‑focused venture firms seeking to capitalize on AI's momentum. While Paradigm continues to manage its existing crypto portfolio, the new fund represents a deliberate expansion into technologies that Huang and Ehrsam believe will define the next decade. The firm's early bets on drone delivery and space defense indicate a focus on hard tech rather than purely software AI.
Paradigm has already started putting the new money to work. The firm also owns a stake in Kalshi Inc., a prediction‑markets platform. Kalshi was valued at $22 billion in March 2026. Paradigm is building its own prediction markets platform and plans to spin it out as a separate company, said Matt Huang. Matt Huang said, "The tech is being built on top of existing prediction markets platforms like Kalshi and won't compete with them."
Matt Huang, managing partner and co‑founder of Paradigm, said the firm is excited about AI beyond just investing. "It feels to us like it really changes everything if you're a founder operating a company or an investor thinking about the future," he said. Paradigm released an AI agent evaluation tool with OpenAI earlier this year.
Paradigm says it will continue to allocate some capital to crypto, though the new fund marks a strategic shift. But the new fund is a clear signal: the firm wants to be part of the AI boom.
The shift reflects a wider rebalancing in venture capital. With Bitcoin down nearly a third this year and AI startups absorbing 70% of all global startup funding in the second quarter, even established crypto investors are diversifying. Paradigm's move is similar to that of other crypto‑native firms, such as Pantera Capital and Multicoin Capital, which have also launched non‑crypto strategies. The fund's allocation to hardware‑heavy areas like drone delivery (Zipline) and space defense (True Anomaly) suggests the firm believes the most transformative AI applications will come from physical systems, not just software.
Subscribe to Market Briefs, our free daily newsletter, and claim your bonus investing masterclass