Paradigm's $1.2B AI Bet: When Your Crypto VC Starts Drone Shopping 🛸

Paradigm, one of crypto's most prominent venture firms, has raised $1.2 billion for a new fund targeting artificial intelligence and robotics, according to a Wednesday blog post. The vehicle represents the firm's third major venture fund and its first to formally expand beyond digital assets, though managing partner Alana Palmedo said the move does not diminish the firm's commitment to crypto. "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," Palmedo told Bloomberg.

Capital from the new fund has already been deployed across several companies, including autonomous drone delivery operator Zipline International, which was valued at $7.6 billion in January, and space defense startup True Anomaly, which reached a $2.2 billion valuation in April. The investments reflect growing institutional interest in AI infrastructure and defense-adjacent technology among venture allocators that historically focused on software and digital asset markets.

Paradigm was founded in 2018 by Matt Huang and Coinbase co-founder Fred Ehrsam and built its reputation as one of the largest dedicated crypto investors. The firm raised a $2.5 billion flagship crypto fund in November 2021, at the time the largest dedicated vehicle of its kind, followed by an $850 million fund for early-stage blockchain startups in 2024.

The firm's interest in AI predates the new fund. In a June 2023 post on X, co-founder Matt Huang said Paradigm had "never been more dedicated to crypto" while also acknowledging that advances in artificial intelligence were "too interesting to ignore." Huang rejected the framing that crypto and AI compete for capital, writing that the firm did not view them as "a zero-sum competition" and expected "plenty of overlap" between the two sectors. At the time, Huang said Paradigm would continue investing across all stages of the crypto market while exploring AI as part of its broader research-driven investment strategy.