In a blog post on May 7, CEO of the cryptocurrency trading platform Binance, said that Initial Coin Offerings outperforms VCs (Venture Capital funds), even with a considerable risk of failure.
In a post published on the company’s blog titled “ICOs Are Necessary, and not Just ‘Good-to-Have,’” Zhao showed his support for ICOs insisting they are “100 times easier” for raising funds than conventional VCs:
“Through personal experience, and seeing hundreds of other projects closely, I would say raising funds through ICOs is about 100 times easier than via conventional VCs, if not more. With the ease of raising capitals improved, reasoning says there may be 100 times more startups, adequately-funded ones, where ICOs are permitted.”
Zhao stated that while some VC investors are real masters in their field, the vast majority of “professional VCs” do not have a clue about the projects or sectors in which they invest. According to Zhao, there is an unusual absence of startup knowledge and insufficient perception of projects’ technologies.
Zhao revealed that the ICO market is in its early days and hence is facing problems, including failures and scams. He still believes that a larger ratio of ICO projects will succeed “compared to ‘conventional VC invested projects.’
“Most Initial Coin Offerings are new startup projects, and are very susceptible to failure, just like in regular startups. This is nothing unusual. Most ICO investors are already aware of this. People who invest in ICOs are learners and early adopters.”
Zhao ended his article by stating that many VC groups are now funding Initial Coin Offerings. He said that VC organizations “have their nose on the money,” continuing that they are more “quick-witted” than other large organizations which are accountable for public wealth; “the faster movers will reap exponential profits.”
It was previously reported that Sequoia, an American venture capital firm sued Changpeng Zhao for breaching an exclusivity contract during discussions of an investment agreement. The deal was for an 80 million dollars, 11 percent stake in Binance which broke down last year.