Paradigm's $1.2B AI Fund Signals Capital Shift Away From Crypto

Paradigm closed a $1.2 billion fund on July 8, 2026, built to chase artificial intelligence and robotics deals outside its crypto roots. Bloomberg’s Rebecca Torrence reported the news.

Matt Huang and Fred Ehrsam founded Paradigm in 2018. Huang came from Sequoia Capital. Ehrsam co-founded Coinbase. Together they built one of the more technically involved firms in crypto investing, often working directly with founders on protocol design alongside writing checks.

The new fund lands at a moment when capital is moving in two different directions. AI startups have pulled in the bulk of global venture dollars over the past year. Crypto deal counts have dropped sharply over the same stretch, with money concentrating in fewer, larger rounds.

Paradigm manages roughly $12.7 billion across its funds. Its 2021 vehicle raised $2.5 billion, the largest crypto-focused fund at the time. A 2024 fund brought in $850 million for early-stage blockchain projects.

Huang has talked about AI publicly since at least 2023, when Paradigm softened crypto-specific language on its website. He said then that the firm remained committed to crypto but found AI developments too interesting to ignore.

Paradigm backed Nous Research, a decentralized AI infrastructure company, in a $50 million round in 2024 or 2025. In February 2026, the firm partnered with OpenAI to launch EVMbench, a benchmark that tests AI agents on finding and patching smart contract vulnerabilities.

That February timing lines up with an earlier Wall Street Journal report that Paradigm was seeking up to $1.5 billion for a fund built around frontier technology. The $1.2 billion close lands close to that target.

The Block reported that Paradigm has already deployed capital from the new vehicle into Zipline, a drone delivery company, through a Series H round in March 2026. The firm also joined a Series D round for True Anomaly, a space defense startup, in April 2026.

Both investments sit outside crypto entirely. Zipline moves physical goods with autonomous aircraft. True Anomaly builds systems for tracking and defending orbital assets.

Paradigm has not stepped away from crypto. The firm co-led a $175 million round in Morpho, a decentralized lending protocol, in June 2026. It led a seed round for M1X Global, a company building infrastructure for tokenized US Treasuries, in July 2026. The firm also holds positions in Kalshi and other prediction market and payments companies.

Paradigm is using its existing technical team to evaluate AI and robotics deals rather than building a separate group for the work. That choice keeps the firm’s crypto expertise in the room for adjacent bets, including AI-driven security tools and autonomous payment systems.

For crypto investors watching capital flows, the move signals that even well-capitalized, crypto-native firms see limited room to deploy larger funds inside crypto alone right now. Paradigm has not issued a detailed public statement with limited partner names or deployment targets.