Time and tide wait for no man, and neither do opportunities in the cryptocurrency industry. The market has always been fast-paced and volatile– once a trend begins, everyone rushes to get on the bandwagon and late adopters will lose out. In light of recent market changes, some projects have begun preparing for the bull run. Likewise, venture capitalists are also scrambling to invest in various blockchain projects before bullish signals begin.
FBG Capital, one of the largest cryptocurrency venture capitalists in China, recently announced its strategic investment in BiKi exchange. The two will cooperate to provide users a better platform for trading with more personalised services.
With many exchanges guilty of washtrading, why did FBG choose to invest in an exchange? With BiKi nowhere near the top amongst all the exchanges of the world, how did it gain the favour of FBG? With these questions, we proceed to analyse this partnership.
- The Invincible “Goldman Sachs of Crypto”
FBG Capital was established in May 2016 and was invested by Sequoia Capital, a Silicon Valley venture capital. In the past, FBG has set its eyes and invested in projects years before they became well-known. These investments include 0x, Zilliqa, OmiseGO, IOST, Aelf, most of which were not regarded as worthy investments by mainstream venture capitalists.
According to reports, FBG invested in 21 projects that year, of which only 9.5% fell through, but the remaining reaped a combined profit as high as 418.6%, with some projects increasing 10 to 100 times.
It is also worth noting that the founder of FBG Capital, Zhou Shuoji is the second Chinese in the blockchain industry to appear on the cover of Forbes Magazine, where he famously announced his hopes to make FBG the “Goldman Sachs of Crypto”.
Looking at the investment distribution map of FBG in its early stages, financial and public blockchain projects account for more than half of the investments, while cryptocurrency exchanges account for only 4%. Since the market is dominated by a few top exchanges, and Zhou has notoriously accurate investments, why would he choose to invest in BIKI, an anonymous exchange?
- BiKi is not “just another exchange”
For high profile investors, there is no fear in the volatility of an investment, but in the missed opportunity for an investment.
Several centralized giants have entered blockchain industry this year—Facebook, Goldman Sachs, JP Morgan, all have their own digital currencies. Coupled with mainstream media’s constant coverage, digital currencies have gained mass acceptance in contrast to two years ago.
If the bull market breaks out again, there will be a high influx of new investors entering the market. Exchanges, being the centre of trade, will be the greatest benefactor of this new wave of users.