Fetch.AI CEO Humayun Sheikh believes that Binance Launchpad has finally brought confidence back to the crypto space following the unsustainable, hype-driven ICO revolution in 2017.
The company, which aims to facilitate a decentralised digital world with autonomous economic agents, raised $6 million in just 10 seconds through Binance Launchpad on February 28.
Binance is looking to raise capital for one project per month on its platform. This new method of fundraising is being called an Initial Exchange Offering (IEO), which is a move away from the dated ICO model.
Binance’s approach brings confidence back to crypto
“Binance Launchpad has brought back some of the confidence in the crypto space,” Humayun Sheikh told Coin Rivet.
Sheikh went on to explain how “daily phone calls” and “three to four visits from Binance” were required before the token sale went live.
This level of due diligence from Binance will undoubtedly be seen positively by regulators, who have been clamping down on a number of unregistered ICOs over the past year.
We encourage others to copy us, especially the LaunchPad model. Copying is validation, and highest form of compliment.
— CZ Binance (@cz_binance) April 10, 2019
“The issue we are facing is that 95% or even more of the crypto space is very immature,” Sheikh added.
“There is a lot of bad press already, and we have to create a balance as we are not a crypto company alone. We are interfacing with universities, we are interfacing with corporates, and we’re obviously hiring people in the real world while competing with several big reputable companies.”
“We didn’t want to just be seen as one of the scams. So when Binance approached us they said, ‘We’re looking for credible projects with credible teams who actually have offices and people working.'”
Fetch.AI CTO Toby Simpson said: “To their credit, they really did do their checks. They looked at our code and spent a long time looking at us, and that is really important.”
Potential risks of IEOs
While Sheikh admitted that Binance Launchpad was a vital step in terms of due diligence and safeguarding investors, he claimed that it still posed a number of potential risks.
“The danger is that now it’s a race for everybody to launch the same thing,” he continued.
“Huobi are going to do it, OKEx are going to do it, and it will just create the same problem again. If Binance needs to churn them out, they did two-and-a-half months of due diligence with us – do you really think every month they’re going to do that?”
“They can’t make that much money out of it. They obviously took some tokens from us but in comparison it’s a small amount. So I feel that if they don’t slow it down, firstly people in crypto don’t have much money left because people lost a lot.”
— Coin Rivet (@CoinRivet) February 27, 2019
“If you churn out one project a month, and every exchange is doing the same, you’re building a lot of projects, and what’s going to happen is a pump-and-dump. That’s coming because what’s going to happen is people will come in, make the money, dump it, make the money, dump it. Then what? Who’s coming in to pick up the pieces? It could affect us massively.”
Simpson added that even though a lot of mistakes were made by start-ups in 2017, it was a vital stage in the learning curve of the cryptocurrency ecosystem: “You need to go through these phases in order to bring this new technology into a space that makes a difference in everybody’s daily lives.”
The ‘S’ word
Tribalism is alive and kicking in the cryptocurrency space, and while this has its perks, it creates an environment in which people will scrutinise other projects without sufficient research.
This usually results in companies being labelled as scams even though they have a working product and a talented team behind the scenes.
Fetch.AI’s CEO hit out at the company’s naysayers, claiming that they clearly have a lack of insight on how to run a business.
“One of the issues is that every two minutes someone calls us a scam,” he said.
“They say, ‘Why did you have to raise $6 million?’, and I just think, have you ever run a company? Do you actually know how much is costs to hire one machine learning person?”
— Outlier Ventures (@OVioHQ) April 10, 2019
He continued: “When you’re competing with the Googles of this world, it costs you roughly between $100,000 and $150,000 in wages to hire someone impressive. I’m not even talking about top level, just five to six years’ experience, and that’s the basic pay. Then you have the office, then there’s national insurance. It even costs us $50,000 per month to run cloud computing.”
One of the perks of Binance Launchpad is that the funds raised are paid out instantly. In February, Coin Rivet spoke to Pillar Project CEO David Siegel, who said that one of the most difficult aspects of launching an ICO was liquidating crypto into fiat. With Binance Launchpad, this issue has effectively been solved.
“Binance gave us the $6 million after the IEO,” Sheikh continued.
“If they were going to say it would be released over two years we would have said no. $6 million is going to cover us for the next eight to 12 months, but we are motivated to deliver. The problem is, we have 43 staff working here, average $120,000 per year. Look it up, it’s big money.”