“ICOs Are Necessary,” Says Binance CEO
Changpeng Zhao, the CEO of the largest cryptucurrency exchange Binance, said in a blog post on May 7th that “ICOs are not just good to have, but necessary” as they perform better than venture capital funds, despite the high risk of failure: “I would say raising money through ICOs is about 100 times easier than through traditional venture capitalists (VCs), if not more.”
Logically, he claims, “there may be 100 times more startups, well-funded startups, where ICOs are allowed,” so when you compare two locations - one where ICOs are allowed and the other where they are not - he asks which one would see more technological innovation, wealth, and better governments.
He also adds that while some VC investors are experts in their fields, the great majority of “professional VCs” have “no clue” about the projects or fields they invest in. There is a notable absence of startup experience and insufficient understanding of projects’ technologies, according to Zhao. Although the ICO market is still in its early days and encountering problems, including scams and failures, “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. This is nothing new. Most ICO investors already know this. ICO investors are early adopters (and learners),” he writes, concluding that many VC groups are now investing in ICOs, as they “have their nose on the money.”
In a message to VCs, he ends his post with, “The faster movers will reap exponential benefits. Don’t get left behind.”