6 billion, a 10-year-old CVC will be permanently shut down

A long-established CVC that has backed over 80 projects and managed 6 billion yuan in capital is gradually winding down its operations.

Multiple foreign media outlets, citing sources, reported that PayPal has officially confirmed the status of its corporate venture capital arm PayPal Ventures: the team has shrunk from more than a dozen people at the end of last year to just two remaining employees. The team introduction page on its official website has also been removed, and the remaining staff are only responsible for wrapping up old projects without participating in new investments.

It is reported that this divestment is overseen by Enrique Lores, the new CEO who took office in February 2026, and it represents a major initiative within PayPal's new round of comprehensive strategic restructuring.

The company stated that all future resources will be fully allocated to its core payment businesses including Venmo, merchant payment processing, and Braintree, spinning off the venture capital division that has little relevance to its main operations yet consumes substantial capital and manpower.

Ten years ago, PayPal Ventures entered the market with a $850 million three-stage fund (equivalent to approximately 6 billion yuan). It successively invested in prominent names in the crypto and fintech sectors such as Anchorage Digital, Plaid, and Talos Global, ranking among the most active corporate investors across the entire payment industry.

This was by no means a poorly performing fund. In a financial report released several months ago, the fund's book performance even contributed positively to PayPal's earnings per share, turning the previous year's negative figures into profitable results.

A still-profitable fund has ceased to exist overnight due to the parent company's top-level strategic adjustment. This is the most illogical yet most authentic part of the entire story. The fate of the CVC business is never determined by itself. Even with strong book performance, it cannot stop the parent company from issuing the order to "focus on core business".

From Ecological Positioning to Independent Operation

PayPal Ventures was founded in 2016. Back then, nearly all large-scale tech companies and financial institutions began considering establishing their own venture capital divisions. Giants like Google, Comcast, and Intel had already treated corporate venture capital as a regular department, and this trend spread to the payment sector, making it impossible for PayPal to stay out of the game.

The logic behind this is easy to understand: early-stage investments allow companies to access future technologies and talents that may disrupt the entire industry at an earlier stage, leveraging their existing payment networks and merchant resources as bargaining chips to build deep partnerships with portfolio companies. For large corporations like PayPal, investing in startups with preliminary proven results is far faster and more cost-effective than developing technologies completely from scratch.

This logic sounds commonplace today, but it represented a relatively innovative operational approach back around 2016.

The sectors PayPal selected were closely tied to its core business. Fintech naturally became its primary focus, followed by blockchain, crypto asset infrastructure, and later artificial intelligence. The fund showed strong preference for crypto assets, once ranking among the most active corporate investors in this space. PayPal itself also launched the stablecoin PYUSD and made layouts in crypto payments, with both moves perfectly aligned in timeline.

In other words, for a very long period, PayPal Ventures functioned more as a pioneer for the parent company's crypto strategy, rather than merely an independent fund existing solely for profit purposes.

The three-stage fund was raised gradually, totaling $850 million. The fundraising pace was not aggressive, instead expanding in tandem with PayPal's own business growth. The scaling of the fund reflected PayPal's recognition of this operational model—it would have been unimaginable to launch the second and third funds if the first one had delivered mediocre returns.

Compared with some more high-profile corporate venture capital firms of the same era, PayPal Ventures maintained a low public profile, rarely making headlines. It mostly engaged in quiet follow-on investments and discreet exits.

At its peak, the team had more than a dozen members, including two partners permanently based in London who were responsible for expanding the European market, making PayPal Ventures appear more international than many of its peers. The team adopted an early-stage investment style with relatively small individual deal sizes, prioritizing synergy potential with PayPal's existing business operations.

A crypto custody firm could later serve as technical or compliance support for PayPal's own crypto business; a fintech data integration company could in turn assist PayPal with its risk control and account system operations.

The role of a "strategic investor" was once one of the key selling points distinguishing CVCs from pure financial investment institutions, and it was also a major reason why many startups were willing to accept such capital—they could gain not just funding, but also endorsement and resource access from a leading tech corporation. As a result, PayPal Ventures did not fully follow the market-oriented fund logic in fundraising and project selection, as the parent company's strategic demands always played an invisible leading role.

It never needed to report DPI to its LPs, nor did it overly fixate on the fund's lifespan, and this remained true for the entire past decade. This relatively lenient assessment mechanism also partially explains why it could long-term invest in crypto asset projects with extended return cycles.

Winners in the Portfolio and Book Performance

Over the past decade, PayPal Ventures' investment portfolio has included many notable names. Anchorage Digital is a crypto asset custodian holding a federal banking license, primarily serving institutional clients. It is one of the few crypto banks in the United States with federal regulatory qualifications, and such licenses themselves represent rare valuable resources.

Talos Global focuses on institutional-grade crypto trading technology, and it is an indispensable player in the crypto asset infrastructure space. Many traditional financial institutions rely on technical services from firms like Talos to build bridges when entering the crypto trading market.

These two companies are also the most frequently mentioned names whenever PayPal Ventures' portfolio is discussed publicly.

Plaid is a well-known provider of financial data interface services, effectively becoming an underlying infrastructure in the U.S. fintech industry. Many consumers may not have heard of the company, but the apps they link to their bank cards very likely use Plaid's APIs, making it one of the top projects in PayPal Ventures' portfolio in terms of valuation and public recognition.

Other notable investments include personal finance app Acorns, enterprise warranty service provider Extend, and stablecoin and payment infrastructure firm Paxos—the latter maintains a certain level of competitive relationship with PayPal's own PYUSD. These projects span different tracks and development stages, and cannot be generalized with a single label, yet they are all centered around the theme of "next-generation financial infrastructure".

The book figures have changed over the past two years. According to the financial report released in February this year, during the fourth quarter of 2025, the fund generated a $0.10 per share gain for PayPal's investment portfolio; in the same period of 2024, it posted a $0.04 per share loss that dragged down overall performance. The swing between positive and negative results indicates significant volatility and unstable book performance for the fund.

However, at least in the final financial report released before news of the shutdown emerged, it delivered a performance that added value to the company's overall results.

Thus, the general public consensus is that this is a strategic choice rather than a forced outcome driven by poor performance. What truly drove the decision was the change in team structure. Two partners based in London resigned successively, reducing the team from more than a dozen people to just two remaining employees who only handle follow-up work for old projects without developing new investments. The page that once listed all team members on the official website is now inaccessible. These details revealed the directional shift much earlier than any formal announcement. Interestingly, PayPal Ventures has not been formally deregistered and still legally exists, but all new investment activities have been completely halted, making it a "living yet static" fund.

For portfolio companies, the impact of this change may not surface immediately, but it is already enough to cause considerable unease. According to an analysis by Startup Fortune, startups that once received PayPal Ventures' investment previously benefited not just from capital, but also from the trust endorsement brought by the PayPal brand, access to its payment network resources, and a signal of market recognition from a leading payment company. Now this signal has weakened, creating particularly tricky challenges for small companies in the Series B financing stage that relied on the strategic investor to facilitate introductions to other potential backers.

Downsizing, Leadership Change, and Top-Down Contraction

Looking back at the timeline, the root cause of this liquidation becomes clear. PayPal's former CEO Alex Chriss held the position for nearly three years, during which the company's stock price dropped by more than 30%, leaving the board dissatisfied with the speed of transformation and execution results.

In February this year, Enrique Lores, the former CEO of HP, took over the role. At the start of his tenure, the board's top concern was that PayPal was increasingly slow to respond to competing payment products from players like Stripe and Apple, gradually losing market share over time.

The new CEO moved swiftly. In April, the company announced a restructuring plan that divided its business into three segments: Venmo, consumer and merchant payment collection services, and a third segment including Braintree, small and medium business payment collection services, and crypto services. A dedicated department for payment services and crypto assets was also established to oversee the crypto business. To some extent, this shows that the company remains committed to crypto assets but will pursue this direction through a different operational model. Concurrently, the company conducted a layoff of approximately 4,760 employees, accounting for around one-fifth of its total workforce, with the goal of saving $1.5 billion in costs. This represented the largest organizational restructuring initiative after Lores took office.

Under this new structure, PayPal Ventures found itself in an awkward position. It did not fall under any of the three core business segments, yet it required long-term capital investment without delivering short-term profitability. When the entire company is moving in the direction of focusing on core operations and reducing costs, an independently operated corporate venture capital fund with long investment cycles naturally becomes the first target to be eliminated.

This is not the first time PayPal has cut non-core businesses to concentrate on its main operations, but the scale of this move is unprecedented for a fund that managed 6 billion yuan in capital and backed over 80 projects.

The method of this liquidation is also worth noting. PayPal has engaged investment bank Jefferies to help sell a portion of its equity stakes in portfolio companies on the secondary market, with Plaid and Anchorage Digital reportedly on the list of potential divestments. As a result, a portion of the equity in these two companies will be transferred to new buyers in the coming period, most likely other institutional investors or specialized secondary fund (S-fund) purchasers. For PayPal, this transaction will generate certain book profits in the short term, alleviate financial pressure during the transition period, and help achieve a graceful conclusion to this liquidation process.

From a broader perspective, PayPal Ventures is not an isolated case. In May this year, Fidelity International's strategic venture capital division also announced its shutdown, nearly concurrent with PayPal Ventures' closure. The corporate venture capital model fundamentally relies on the parent company's willingness to pay for long-term strategic value. When parent companies themselves face growth pressures and shareholder scrutiny, such non-core businesses naturally become the first to be reconsidered.

However, this does not lead to the conclusion that corporate venture capital is outdated. Giants like Google and Microsoft still maintain sizable venture capital divisions, so this is more likely a case-specific strategic choice rather than a sign of overall decline across the entire CVC track.

For startups that have received investments from PayPal Ventures and are currently seeking their next round of financing, this news translates to a very practical reality: the value of the strategic investor identity once highlighted in their financing press releases is now being re-evaluated. As for PayPal itself, after divesting this 10-year-old fund, we will have to wait for future quarterly financial reports to see how it performs and whether it can fully redirect the saved capital and resources to maximize their impact on core business growth.

This article originates from the WeChat Official Account "Rongzhong Finance" (ID: thecapital), written by Wang Tao, and republished with authorization from 36Kr.