Zhao Chanpeng, Binance CEO mentioned that Initial Coin Offerings (ICOs) is a system that is much easier than traditional venture capitals to raise money for a startup, even if the risk of fraud is higher, according to a blog post published on May 7.
In the blog post, Chanpeng also expressed that “a vast majority of ‘professional VCs’ have no clue about the projects or field they invest in.”
He also argued that since it is much easier to raise money through ICO, that means there will be more innovations and more projects on which the government could collect taxes, which would help a country’s economy a lot.
Binance CEO mentioned in the blog post,
“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. Many of them have zero startup experience and don’t even have a basic understanding of the technologies involved their fields. […]I do believe compared to “traditional VC invested projects,” a larger ratio of ICO projects will succeed”
Chanpeng further argues that new startup initiatives have the same level of risk of failure than tradition VCs.
“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 said.
At the beginning of March, Binance announced it would launch a decentralized cryptocurrency exchange.