Old Money in Crypto Shifts: Paradigm Raises $1.2 Billion, Half Bet on AI and Robotics

Author: Claude, Deep Tide TechFlow

Deep Tide Insight: If you still think of crypto VCs as just buying coins, Paradigm's new $1.2 billion fund will make you rethink. This firm, managing nearly $12 billion and one of the most formidable institutions in the crypto space, has clearly directed its fourth fund towards AI, robotics, and crypto, against the backdrop of a global venture capital investment of $510 billion in the first half of the year, of which crypto only received $10.8 billion. Old money is voting with its feet; the question is whether it still values pure crypto projects.

On July 8, crypto venture giant Paradigm announced the completion of its fourth fundraise, totaling $1.2 billion, expanding its investments from crypto to AI, robotics, and other cutting-edge technologies. This is the fourth fund since the company's inception and the third venture capital fund.

Managing Partner Alana Palmedo wrote on X platform that this $1.2 billion will be invested in "steep exponential growth," stating that those who supported them eight years ago believed in the forefront of crypto, and now they are doubling down on the "colliding frontiers" of AI, crypto, space, deep tech, and energy. Co-founder Matt Huang was quoted in a Bloomberg interview saying that crypto was their first frontier and remains exciting, but there are now too many things that cannot be ignored.

For the crypto industry, this is not a tactical adjustment from a small institution. Paradigm, founded in 2018 by Huang (former Sequoia partner) and Coinbase co-founder Fred Ehrsam, is one of the largest venture capital firms in the crypto space, managing nearly $12 billion in assets by the end of 2025. The fact that an institution that has "crypto-native" written on its sign is publicly diverting half of its ammunition to invest in AI and robotics is a signal in itself.

$1.2 Billion Below Expectations, Halved from Previous Crypto Fund

The figure of $1.2 billion is interesting when viewed in the context of 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 $1.2 billion is more than half less than 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, but the final amount of $1.2 billion fell short of the target by about $300 million.

While the fundraising fell short of expectations, the direction has broadened. With less money, the number of investment tracks has increased, pointing to the same issue: the single crypto track can no longer accommodate the amount of money that leading institutions want to invest.

For those holding crypto assets or paying attention to the primary market, the operational implication here is that the total amount of crypto bullets from leading VCs is shrinking, and early pure crypto projects may face a more discerning and dispersed pool of funds in the future.

$510 Billion in Venture Capital in the First Half, Crypto Only Received $10.8 Billion

The real reason for Paradigm's shift lies in the funding flows of the entire industry.

According to Crunchbase data from July 2, global venture capital reached $510 billion in the first half of 2026, setting a new record for half-year investments, surpassing last year's total of $440 billion. A significant portion of this money was taken by AI, with just OpenAI and Anthropic accounting for over 40% of the financing in the first half. (Disclosure: Anthropic is the developer of the Deep Tide content tool Claude; this data comes from public reports, not provided by Anthropic.)

In stark contrast, the situation for crypto was quite different. According to Cryptorank data, venture capital flowing into crypto in the first half was only $10.8 billion, less than 2.5% of the global total. On one side, AI financing is booming; on the other, crypto investment is cooling down, which is the direct backdrop for Paradigm's decision to expand its investment tracks.

Bloomberg's statement is more straightforward; Palmedo describes not a "either-or" trade-off, but rather an abundance of "too many things to invest in." The underlying message is that Paradigm believes it has enough capital and research capability to invest in both without sacrificing one for the other.

Crypto Has Not Been Abandoned, But Downgraded to "One of the Frontiers"

Palmedo and Huang both repeatedly emphasize that they have not abandoned crypto, and this statement needs to be unpacked.

In the new fund's investments listed by Paradigm, crypto still occupies an important position: decentralized derivatives exchange Hyperliquid, stablecoin public chain Tempo co-incubated with Stripe, and prediction market platform Kalshi. They continue to invest in open-source tools like Ethereum development tools Foundry and Reth. These are all currently the most active themes in crypto: decentralized trading, stablecoin infrastructure, and regulated event markets.

However, the list of non-crypto investments is equally long: autonomous drone delivery company Zipline, rapid manufacturing platform SendCutSend, space defense startup True Anomaly, and open-source AI developer Nous Research (developer of Hermes Agent). According to CoinDesk, among the projects already invested in by the new fund, Zipline was valued at $7.6 billion in January this year, and True Anomaly was valued at $2.2 billion in April.

Huang's position is that crypto and AI are not zero-sum competitors; there is a lot of overlap between the two. Paradigm also specifically highlighted a crossover project, EVMbench, which is a blockchain security benchmark test developed in collaboration with OpenAI. (Disclosure: OpenAI is a competitor of Anthropic.)

For those in the crypto industry, the signal here is that even in the eyes of the most steadfast crypto VCs, crypto has already shifted from being the "only track" to being "one of the frontiers." The dilution of funds and attention is a fact; whether this is good or bad for specific projects depends on whether they stand at the intersection of crypto and AI.

Not Just Paradigm, Old Money in Crypto Collectively Expands

Paradigm is not an isolated case; in recent months, crypto VCs have collectively been moving beyond crypto.

According to Bloomberg, in May, crypto venture 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 both crypto and AI, robotics, and energy. Along with Paradigm, these three leading crypto VCs have coincidentally included AI in their investment scope within two months.

This wave of expansion has both defensive and offensive aspects. On the defensive side, the crypto market has become more institutionalized, more regulated, and more concentrated on a few large platforms, with fewer early projects capable of absorbing large venture capital checks. On the offensive side, AI and robotics are creating a new cycle of company creation, with scale and urgency being exactly what venture capitalists desire.

For those looking to enter the crypto primary market, this trend means that it may become increasingly difficult to follow leading VCs and only bet on crypto. These institutions are treating crypto as part of the "frontier tech stack," rather than the entirety. The next big company they incubate may not even fall within the crypto category.