Crypto and Web3’s new paradigm

A new peak in investor interest in cryptocurrencies has been reached with Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang raising $2.5bn for Paradigm One, their first venture capital fund.

The fund tops that of VC firm Andreessen Horowitz, which earlier this year raised twice as much as it had hoped for in its new cryptocurrency fund, bringing in $2.2bn. At the time, it said it was the “largest crypto fund ever raised”.

Miles Kruppa in San Francisco reports Paradigm’s success in also raising twice what it targeted could stoke fears about a bubble in cryptocurrencies, especially in the niche corners of decentralised finance (DeFi) where the firm has made its name.

Both VCs are focused on an expanding ecosystem of applications based on ethereum, the digital ledger that allows programmers to write contracts automatically executing functions such as money transfers. The programs run on what are known as tokens. Paradigm’s founders said the world of token-based apps, sometimes referred to as Web3, still had more room to grow.

Several so-called decentralised finance protocols backed by Paradigm, such as the token exchange Uniswap, have soared in value in the past year as more people move money away from the legacy financial system. In areas such as gaming and music, developers are also experimenting with new ways to distribute value to consumers using tokens.

In other developments, today’s FT Special Report on Risk Management looks at how crypto is pressuring markets into 24/7 trading, while we also explore how cryptocurrency trading platforms masquerade as “exchanges”, when, most of the time, they are actually brokers.

The Internet of (Five) Things

1. China IPOs’ seven-year ditch
Funds raised by tech start-ups’ public listings in mainland China are heading for the first annual drop in seven years as Beijing’s crackdown on the sector sends investors in search of alternative markets. Tech IP0s have raised about $14bn in 2021, according to Dealogic, trailing last year’s total by $2.3bn. A further drag on listings came on Sunday, when China’s internet regulator released draft rules that would require companies listing in Hong Kong to undergo a cyber security review.

2. Satellites of M&A love
The proposed $7.3bn takeover of Inmarsat by US group ViaSat leaves rivals including SES, Eutelsat, Intelsat and EchoStar considering how to scale up in a fragmented market or face becoming corporate space junk, reports Nic Fildes.

3. Substack passes million milestone
Newsletter platform Substack has reached 1m paying subscribers, underlining the growing power of à la carte journalism by individual writers as a business model for news. That has to be a cue for a shameless plug for #techFT: please ask friends and colleagues to sign up here.

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4. The murky world of online reputation management
Alphaville’s Jemima Kelly says the ORM industry is currently raking it in. She examines the reputation of Pure Reputation which, since 2010, has “tailored solutions for individuals, brands and companies who want to protect their name online”.

5. The best tech books of 2021
What should you be reading this Christmas to stay in touch with tech’s outrageous advances? John Thornhill has five suggestions, from A Thousand Brains — a new theory about the nature of human intelligence — to Exponential, Azeem Azhar’s look at how accelerating technology is leaving us behind.

Tech week ahead

The tech earnings season is coming to an end, but we will get reports from China’s Alibaba, Baidu and JD.com this week. In the US, chipmaker Nvidia and network equipment maker Cisco have results, Vodafone reports in the UK and Paytm is set to become India’s biggest IPO.

Monday: Electric vehicle start-up Lucid has its maiden earnings report after the market close. Deliveries started last month for the Lucid Air, its $169,000 debut car.

Tuesday: Vodafone investors will be assessing the telecoms group’s post-pandemic growth prospects when it reports half-year results. Vodafone has been busy doing deals in the UK to broaden its broadband footprint in the home market. The return of international travel and the general uptick in business activity should have helped lift mobile phone use. Cristiano Amon, chief executive of wireless chipmaker Qualcomm will lay out its new strategy at its investor day. NetEase and Sea Limited report earnings in Asia.

Wednesday: Chipmaker Nvidia reports after the closing bell, with analysts expecting a positive impact from use of its processors in crypto mining. Cisco Systems and wireless speaker maker Sonos report earnings as well. Sonos has prospered in the pandemic and its share price has doubled over the past year. In China, search engine Baidu has results.

Thursday: Shares in Indian digital payments provider Paytm are expected to be listed on the country’s top stock exchanges. The $2.5bn initial public offering, India’s largest, was oversubscribed 1.89 times. In China, Alibaba and JD.com report results.

Friday: The 19th Guangzhou International Automobile Exhibition will kick off in the southern Chinese city. It will last 10 days and comes as demand for electric vehicles rises.

Tech tools — Christmas gadgets gift guide

Jamie Waters of How To Spend It has assembled a gaggle of gadgets to please loved ones at Christmas, ranging from the £20 Ozeri travel-sized electric wine-bottle opener to the $700 Arcade1Up Infinity Game Table (pictured), which features touchscreen versions of classics such as Scrabble and Monopoly.