ICOs Are 100 Times Easier Than Traditional Venture Capital – Binance CEObr>
Changpeng Zhao, founder and CEO of Binance, the world’s largest cryptocurrency exchange by market capitalization, said that initial coin offerings (ICO) perform far better than venture capital (VC) funds, even with the risk of fraud.
In a blog post, Zhao said that he believes raising money through ICOs is about 100 times easier than through traditional VCs, if not more. the Binance chief argued that “a vast majority of ‘professional VCs’ have no clue about the projects or field they invest in.
“While some professional VCs investors are truly experts in their field, and genuinely trying to help entrepreneurs, I find the vast majority of “professional VCs” have no clue about the projects or field they invest in,” Zhao said. “Many of them have zero startup experience and don’t even have a basic understanding of the technologies involved their fields. Many VCs don’t use the products of the companies they invest in. They look at hundreds of projects, across a variety of industries, spends most of their time negotiating with entrepreneurs, while staying at five-star hotels and fly business all day long.”
In contrast, Zhao said retail investors in an ICO are genuinely interested in the industry, have been following the team, and are not shy about sharing any negative findings on social media or question the founders in Telegram groups directly. He admitted that ICOs have a high rate of failure, but he still believes that compared to traditional VC invested projects, a larger ratio of ICO projects will succeed.
“Most ICOs are new startup projects, and have a high rate of failure, just like in traditional startups,” said Zhao. “This is nothing new. Most ICO investors already know this. ICO investors are early adopters (and learners).”