In a blog post on May 7th 2018, the CEO of the cryptocurrency exchange Binance, Zhao Changpeng, said that the Initial Coin Offering (ICO) model for raising risk capital “is about 100 times easier than through traditional Venture Capital (VC), if not more”.
Changpeng’s statement is remarkable and at the same time critical, which reveals the current and changing reality of the VC world which has also been influenced by blockchain technology. Binance has positioned itself as one of largest cryptocurrencies exchange in the world and had their own ICO launch (BNB) in 2017.
In the blog post, Changpeng argued that the vast majority of professional VCs “have zero experience at the start and do not even have a basic understanding of the technologies involved in their fields,” Changpeng continued, and despite admitting that some ICOs result in failures or frauds, he continues to believe that “compared to traditional VC projects invested, a greater proportion of ICO projects will be successful.”
On the other hand, the executive argued that most of those who put their money to buy Tokens are aware of the risk they are taking.
Changpeng’s statements reaffirm his positive position before the ICO saying that this financing model could increase the number of emerging companies in a country, which would exponentially increase the technological and financial potential of the place despite the opinions rejecting ICOs and cryptocurrencies in general and the regulatory wave that has condemned ICOs in some countries.
Most ICOs are startups and have a risk index, just like any traditional startups. However, some ICOs are carried out by companies with years of experience in their business model as is the case for Robotina. This is not new and ICO investors already know this. For this reason, there are evaluation tools for ICOs carried out by professionals in the area such as ICObench, TrackICO and CoinSheldule.