As of now, we all probably know Changpeng Zhao, the billionaire CEO of the cryptocurrency exchange, Binance, which currently seems to occupy the number one spot in the space.
If you’re not familiar with him yet, take a quick look at his background. He’s been working with stock exchanges, crypto, and the technology around both for his entire career.
Lately, Zhao’s drawn interest from the media for his statements on ICOs that he recently posted on Medium. CoinDesk, CoinTelegraph, and others are quoting him as saying, “ICOS are 100 times easier than traditional venture capital.”
Essentially, they’re painting him as being in strong opposition to VC-based funding, as of now.
Upon taking a look at the blog post which is being cited for these pieces, certain information comes to light. First of all, Zhao is hedging his opinions more than traditional crypto news outlets are giving him credit for.
He doesn’t just make a blanket statement about the ease of use of ICOs over traditional funding. He, in fact, clarifies this by stating that ICOs may be 100 times easier and it all depends on this logic being applied to areas where ICOs are legally allowed.
Secondly, Zhao’s argument, at least in the beginning, only aims to point out which option is more attractive to entrepreneurs based on how and at what speed funds can be raised. He states the same for investors, speaking only to the relative ease of the process as compared to working with a VC.
Thirdly, he actually does base his major arguments on a truly striking assumption. Zhao says that he believes that the “vast majority of VCs” don’t have a clue about the industries that they’re in.
While many of us deeply respect Zhao and his work, a key question comes to mind in response to this. What’s motivating this argument? Does it, in fact, have anything to do with his legal battle with Sequoia Capital, which is reportedly still going on?
The answer to this isn’t clear, but it’s logical to say that this needs to be considered as at least, a partial source of motivation for his post. It is this writer’s belief, however, that it isn’t the entire source of his motivation, judging by some of the points that he attempts to make next.
Zhao adds to these points against VCs by making it clear that he believes every would-be ICO investor needs to be just as diligent as a good VC that knows his or her industry. This calls back to that age-old saying in the crypto-world, “do your own research.” Don’t invest in anything that you don’t know like the back of your hand. In the end, he also admits that ICOs are rife with scams due to the industry being in its infancy.
Given this as well as his points against existing VCs, it could logically be said that what Zhao actually wants is reform in the Venture Capital industry.
In adding to this, one could posit that he wants a new-age of VCs that actually know their stuff and actually do their research. This idea seems to be substantiated by his caveat that some VCs are true experts in their field but the majority aren’t. He also says here that we could do with more knowledge on how startups work and how tech-projects work in the VC space.
With this in mind, who is the future, expert VC? It could be the crypto-worker who knows his or her stuff and is experienced with the industry in a well-rounded way. Take Zhao’s post more as a call for change and less as a diatribe. Then, the question becomes: what can each of us do to affect this change?