Holy smokes.
That’s been the collective reaction around these parts after reading a new post by business journalist Eric Newcomer, who smartly took the time to review filings for his newsletter, Newcomer, that reveal how much money some of biggest brands in venture capital are currently managing. The numbers are, frankly, staggering.
Note that these are all firms that are structured as registered investment advisors and thus required to disclose their assets under Securities & Exchange Commission rules.
The biggest surprise, per Newcomer, is that the four-year-old crypto investment firm Paradigm Capital disclosed that its assets under management have ballooned to $13.2 billion. Would you have guessed at that amount? We would not, though in fairness, we hadn’t spent a lot of timing thinking about it, either. (We do have lives to lead.)
What we did know: Paradigm was formed four years ago by Coinbase cofounder Fred Ehrsam and former Sequoia Capital investor Matt Huang. (Four is pretty young as these things go.) The pair, who already oversee around 50 people, recently closed their biggest fund yet with $2.5 billion late last year . . .which seemed like a lot of money when they announced this back in November and now seems like less money.
What we didn’t quite consider are the bets Paradigm has made in companies whose valued have soared over the last couple of years in particular, including, naturally, Coinbase. Its market cap is currently $43 billion but its market cap hit a whopping $85 billion when it began trading publicly in April of last year, and because it was a direct listing, investors were free to sell immediately. Paradigm happened to be the outfit’s second-biggest outside investor, with an 11.4% stake in the company, which explains a lot.
It’s also an early investor in the Bahamas-based exchange FTX Ventures, which was valued at $32 billion by its private investors when it last raised funding in January.
But wait, there’s more.
If you had to guess how much in assets Andreessen Horowitz (a16z) was managing, how much would you guess? Maybe $25 billion? You would be wrong by roughly half, as it turns out. Indeed, per the disclosures surfaced by Newcomer, the 12-year-old firm was managing $54.6 billion in assets as of disclosures made last week. That’s more than half as much as it was managing when it last made a disclosure. (Newcomer doesn’t mention when this was made — we’re still looking for this one — but we’re guessing it wasn’t more than a year ago.)
How did it happen? As with Paradigm, raising sizable funds has played a role, but in a16z’s case, fundraising has played a much bigger role. The firm has raised a stunning $25.5 billion in capital from investors since its 2012, including via its crypto and bio practices (and that’s not including that $4.5 billion the company is reportedly raising for its crypto arm right now). Add into the mix its bet on Coinbase — the firm owned roughly a quarter of the exchange when it began trading publicly — and a big bet on Github that turned out pretty nicely (especially if the firm held on to that Microsoft stock), and you start to appreciate how the firm ended up in its position.
As for Sequoia Capital, this is a firm that has a long history — it’s now 49 years old — but good God does it manage a lot of money. Per the filings Newcomer uncovered, its most recent tally is $85.5 billion.
The amount puts Sequoia somewhat narrowly ahead of 23-year-old Coatue (it disclosed $72.1 billion in assets last week) but behind 19-year-old Tiger Global, which apparently has a truly jaw-dropping $124.7 billion (though these numbers appear to be in flux, as they often are).
Consider our hair blown back. More here.