You’ve probably seen the memes of the “pivot from Web3 to A.I.,” jesting that venture capital investors have ditched the old hot new thing, crypto, for the new hot new thing, artificial intelligence. For some crypto-focused VCs, like Paradigm, the allure of A.I.—and a potential shift in their interests—has sparked some backlash.
The firm, started by Coinbase cofounder Fred Ehrsam and former Sequoia Capital partner Matt Huang, recently erased all mention of crypto or Web3 from its website homepage—branding previously touted front and center—as crypto news site The Block spotted in late May. The report caught the attention of my colleague Leo Schwartz and me, and we decided to dig a bit deeper. We discovered that it wasn’t just Twitter users who were raising eyebrows over the changes. As we reported:
One [Paradigm] LP, who spoke to Fortune on the condition of anonymity, said the public changes to its website—and any potential shift in investing focus—were not conveyed to them. Paradigm is “notoriously bad [at] LP relationships, unfortunately,” they said.
Notably, the fund also does not have a dedicated investor relations employee, with COO [Alana] Palmedo handling the responsibility. Meanwhile, a Paradigm portfolio company founder also told Fortune that, to their knowledge, the firm didn’t communicate changes to the site to its companies.
Another founder of a Paradigm portfolio company, who requested anonymity to speak freely, said the decision felt “weird” to them.
“If a new founder asks me whether they should raise from [Paradigm], I would be like, maybe that’s not at the top of the list anymore,” they said. “They’re just not focused on it, and it does feel a little like, ‘Hey, we invested in all this stuff, but actually we don’t care anymore,’ which is probably why they’re trying to say it’s a non-change.”
To be clear, Paradigm insists they’re not shifting the firm’s focus from crypto to A.I. As Palmedo, the COO, told us, “The new website language emphasizes the research-driven approach Paradigm has always had and doesn’t reflect a pivot away from crypto.” And Huang wrote in a tweet this month that “We haven’t dropped crypto…some of our research team has been tinkering with AI and AI x crypto.” He also elaborated in a lengthier tweet this week that the firm has “never been more dedicated to crypto.” Indeed, Paradigm is still penning research on crypto, although the firm has only announced a couple crypto deals in 2023.
Some of Paradigm’s other portfolio company founders are shrugging off the event, while one Paradigm founder, Dee Goens, cofounder and COO of NFT creation platform Zora, doesn’t think “there’s a VC firm in the space that has a better overall purview of crypto than Paradigm.”
You can read the whole story here, but I’d wager we’ll see more such statements and tweets from crypto VCs highlighting the promise of A.I. technology—and how it overlaps with crypto—in the coming months.
See you tomorrow,
Anne Sraders
Twitter: @AnneSraders
Email: anne.sraders@fortune.com
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