That was the collective reaction in these parts after reading a new piece from business journalist Eric Newcomer, who wisely took the time to review submissions for his newsletter Newcomer, which show just how much money some of the biggest brands are making in venture capital currently manage. To be honest, the numbers are frightening.
Note that these are all firms structured as registered investment advisers and are therefore required to disclose their assets under Securities & Exchange Commission regulations.
The biggest surprise, according to Newcomer, is that four-year-old crypto investment firm Paradigm Capital announced that its assets under management have grown to $13.2 billion. Would you have guessed this amount? We wouldn’t, although in fairness we hadn’t spent much time thinking about it either. (We have lives to lead.)
What we know so far: Paradigm was founded four years ago by Coinbase co-founder Fred Ersham and former Sequoia Capital investor Matt Huang. (Four is pretty young when it comes to these things.) The couple, who already oversee about 50 employees, recently closed their largest-ever fund at $2.5 billion late last year. . .which looked like a lot of money when they announced this in November and now looks like less money.
What we haven’t quite factored in are the bets Paradigm has been making on companies that have risen in value, particularly in recent years, including Coinbase, of course. Its market cap is currently $43 billion, but its market cap reached a whopping $85 billion when it began public trading in April last year, and because it was a direct listing, investors were able to sell immediately. Paradigm happened to be the company’s second-largest outside investor with an 11.4% stake in the company, which explains a lot. It’s also an early investor in Bahamas-based exchange FTX Ventures, which was valued at $32 billion by its private investors when it last raised funds in January.
But wait, there’s more.
If you had to estimate how much wealth Andreessen Horowitz (a16z) manages, how much would you estimate? Maybe $25 billion? You would be wrong by about half, it turns out. In fact, according to disclosures released by Newcomer, the 12-year-old company managed $54.6 billion in assets as of the disclosures made last week. That’s more than half what it was when it was last disclosed. (Newcomer doesn’t mention when this was done — we’re still looking for that one — but we’re guessing it wasn’t more than a year ago.)
How did it happen? As with Paradigm, raising significant funds has played a role, but in the case of a16z, fundraising has played a role a lot of bigger role. The company has raised an impressive $25.5 billion in capital from investors since 2012, including through its crypto and bio practices (and that doesn’t include the $4.5 billion the company is reportedly currently raising). for its crypto arm). Add to the mix his bet on Coinbase — the firm owned about a quarter of the exchange when it began public trading — and a big bet on Github that did pretty well (especially if the firm held onto that Microsoft stock) , and you begin to appreciate how we ended up here.
As for Sequoia Capital, it’s a company with a long history — it’s 49 years old now — but my God, it has a lot of money under management. According to the documents uncovered by Newcomer, its most recent balance sheet is $85.5 billion.
That amount puts it ahead of Coatue (it disclosed $72.1 billion in assets last week) but behind Tiger Global, which appears to have a truly staggering $124.7 billion.