Tether’s $1B Investment Plan: Redefining Classic VC

Tether, a prominent player in the stablecoin market, is gearing up to allocate a significant chunk of its revenue to advancing technologies in emerging markets, artificial intelligence (AI), and biotechnology, as revealed by its CEO Paolo Ardoino. In a recent interview, Ardoino shared that Tether plans to invest at least $1 billion through its venture capital arm over the next year.

The company already has a dedicated team of 15 specialists who meticulously evaluate hundreds of investment proposals each month. Over the past two years, Tether’s venture capital division has already funneled about $2 billion into tech sectors like AI and alternative financial infrastructure. This sizable investment effort underscores Tether’s commitment to staying at the forefront of technological innovation.

A notable portion of Tether’s investments has been directed towards AI. The company has invested over $1 billion in the sector, including a notable $610 million debt financing facility to support Northern Data Group, a data center operator, in 2023. Ardoino highlighted that one of Tether’s strategic advantages is its ability to offer AI computing resources to all the companies it supports. This, he believes, facilitates disintermediation in traditional finance, reducing reliance on tech giants like Google, Amazon, and Microsoft.

The CEO’s remarks followed Tether’s announcement of a record net profit of $4.52 billion in the first quarter of 2024. A substantial portion of these profits, about $3.52 billion, derived from financial gains on Bitcoin and gold, while an additional $1 billion was attributed to operating profits. These impressive financial results have bolstered Tether’s capacity to invest heavily in transformative technologies.

According to Ardoino, Tether’s profitable ventures have drawn significant interest globally, attracting a plethora of investment pitches monthly. Tether maintains a selective approach, committing to only a small fraction of these opportunities. Ardoino emphasized that Tether does not impose stringent profitability targets on startups in the immediate one to two years following their investment. Instead, the firm prioritizes investments in projects they find exceptionally intriguing and aligned with their strategic interests.

What sets Tether apart in the venture capital landscape is its unique investment philosophy. Ardoino pointed out that Tether does not operate like a traditional venture capital firm. Their approach is more focused on investing in technologies and projects that resonate with their corporate values and long-term strategic goals. This distinctive strategy perhaps contributes to Tether’s standing as a powerhouse in the cryptocurrency industry.

Operating the largest traded cryptocurrency and stablecoin, Tether (USDT), the company has undergone significant restructuring. This restructuring, which took place in April 2024, divided the business into several specialized divisions including Tether Data, Tether Finance, Tether Power, Tether Edu, and Tether Evo, among others.

Beyond its ventures in AI, Tether has been increasingly active in the Bitcoin mining sector. In May, the company invested $150 million in Bitdeer, a crypto mining firm led by Jihan Wu, further expanding its footprint in the cryptocurrency ecosystem.