Paradigm undergoes another paradigm shift, expanding from cryptocurrency into the field of AI.

2023-05-26 13:00

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Removing cryptocurrency references from the official website and venturing into AI, what paradigm shift is Paradigm undergoing?

Original Title: "Deleting Cryptocurrency Description on Official Website, Moving into AI, Where is Paradigm Transferring to?"

Original Source: "TechFlow of DeepTech"

If you want to ask which VCs are the most powerful in the cryptocurrency field, Paradigm must be on the list. During the bear market, they went all in on Bitcoin and made a name for themselves by incubating Uniswap. The name Paradigm comes from the concept of a paradigm shift, which represents a scientific revolution where one paradigm replaces another.

Now, Paradigm is undergoing a paradigm shift once again, no longer solely focusing on cryptocurrency/Web3, but expanding its focus to include AI.

Sharp-eyed netizens have noticed that Paradigm has quietly modified its website homepage. The homepage title has been changed from "Paradigm supports disruptive crypto/Web3 companies and protocols with funds ranging from as little as $1 million to over $100 million" to "Paradigm is a research-driven technology investment company", and expressions related to cryptocurrency/Web3 such as "We believe that cryptocurrency will define the next few decades" have been deleted.

Let's make a comparison.

Old website:

Paradigm supports disruptive crypto/Web3 companies and protocols with funding ranging from as little as $1 million to over $100 million.

Every once in a while, a new technology emerges that changes everything. The internet has defined innovation for the past few decades. We believe that encryption technology will define the next few decades.

Paradigm is an investment company that focuses on supporting future cryptographic/Web3 companies and protocols. Our approach is flexible, long-term, multi-stage, and global. We often participate in the earliest stages of establishment and continue to support our portfolio companies over time.

From technology (mechanism design, smart contract security, engineering) to operations (recruitment, regulatory strategies), we adopt a hands-on approach to help projects fully realize their potential.

New official website:

Paradigm is a research-oriented technology investment company.

We invest and build companies and partnerships with funds ranging from as little as $1 million to over $100 million. We often get involved at the earliest stages and continue to support our portfolio companies over time.

From technology (mechanism design, security, engineering) to operations (recruiting, going public, legal and regulatory strategies), we take a hands-on approach to help projects fully realize their potential.

According to the latest article from The Block, insiders revealed that Paradigm is shifting its focus from solely cryptocurrency to also include "cutting-edge" technologies such as artificial intelligence. Those familiar with the strategy say that the company has not changed its mission and continues to focus on cryptocurrency and web3, with the updated website copy aimed at emphasizing its technological research.

This has disappointed many people. As a leader in the cryptocurrency industry VC, Paradigm, this thick eyebrow and big-eyed guy, has also started to betray the revolution. The dusty emoticons have found a place to shine.

So, what does Paradigm's active "paradigm shift" mean?

Firstly, from an external perspective, AI is hot while the cryptocurrency industry is losing momentum.

OpenAI's ChatGPT, a subsidiary of OpenAI, has sparked an AI frenzy. Both primary and secondary markets have taken off with the support of AI concepts. When NVIDIA's financial report was released, its market value increased by $220 billion overnight, bringing it one step closer to the trillion-dollar market value threshold.

Looking at the cryptocurrency market, the secondary market is still in a bear market with continuously shrinking trading volume, and regulatory pressure from the United States is also increasing.

Secondly, Paradigm may have its own helplessness.

In November 2021, Paradigm announced the completion of a new $2.5 billion fund raising, with a large amount of investable capital.

In January 2022, Citadel Securities, the largest market maker on Wall Street, announced that it had secured $1.15 billion in funding led by Sequoia Capital and cryptocurrency investment firm Paradigm, with a valuation of $22 billion.

This seemingly unrelated investment caused a sensation in the industry. At the time, we commented on Twitter that as a VC, Paradigm had an urgent task of investing the money. When the fundraising was too much, the available investment options would become fewer, and expected returns had to be obtained. Therefore, in the environment of overall overvaluation of cryptocurrencies at that time, investing in Citadel Securities might be a more cost-effective choice.

For any fund, the larger the fundraising scale, the greater the investment pressure. They need to shoot all their bullets within a limited time and obtain the expected return. However, for a crypto VC, in a bear market and with an unclear future narrative, it is not easy to shoot all their bullets.

At this point, there are often two options:

(1) Invest in the secondary market and purchase assets with better liquidity.

For example, on May 13th, Paradigm's entity, Paradigm One LP, purchased 810,000 shares of Coinbase stock for a total price of approximately $50 million. Currently, they hold a total of 4.5 million shares of Coinbase stock.

(2) Layout in other fields and diversified investment.

Just like various A-share themed funds before, whether it's healthcare or new energy, they all ended up buying Maotai and became liquor funds.

Finally, for Paradigm, cryptocurrency has also brought trauma.

Paradigm was once a major supporter of FTX, investing $278 million. With the collapse of FTX, the investment also went up in smoke, accompanied by doubts.

In November 2022, Paradigm co-founder Matt Huang issued an apology, stating that they had invested in a founder and company that ultimately did not align with the values of cryptocurrency, and that they were sorry for the significant damage they had caused to the crypto ecosystem.

It is worth mentioning that in July 2022, after the Luna crash, Matt Huang sent a letter to LPs explaining the reasons and impacts of the recent cryptocurrency market crash, and providing psychological massage.

At the end, he wrote, "Looking ahead, we will continue to focus on the decades-long opportunities of cryptocurrency. Our team and the entrepreneurs we support have found that in a quieter environment, it is easier to focus on substance without distraction. Speculative tourists have left and valuations are beginning to rationalize. Strong companies are finding it easier to hire top talent. Overall, we are optimistic that the next 12-24 months will be a good time to build and invest in cryptocurrency."

Hopefully, words are followed by actions.