An Avid Investor in Cryptocurrency Finds His Tens of Millions of Investment Trapped Amid Gloom Outlook
A middle-aged angel investor in southern China faces a dilemma: he fails to sell the equity of hundreds of blockchain projects he has invested in recent months. Since 2016, he has led investment in nearly one hundred blockchain projects in many Chinese cities. But now he has descended into a slight depression from an avid blockchain investor.
The man refused to disclose his real name due to privacy concerns( we call him Mr. P in this article). His painful investment experience is a reflection of the current state of the fledgling industry and the fraud-filled cryptocurrency market.
Mr. P said most of the blockchain startups that he invested in are established by “post-90”, or even “post-95” generation who have limited experience with blockchain technology. Many of them are engaged in e-commerce, software and app development before jumping on the blockchain bandwagon.Their sudden transition is only for getting rich quick.
For example, some blockchain teams cash out the fund that they raised from Initial Coin Offerings(ICO) immediately after the fundraing activity was completed. Reasons for these irresponsible behaviors are various, ranging from marketing, PR, to salary expenses.
“From an investor’s perspective, if blockchain startups are able to raise a new round of financing as soon as possible before running out of money, or he is able to sell the project’s equity at a good price at the right time, the investor’s own goal has been achieved.” Mr. P said.
However, blockchain projects’ equity is not hot in demand at present due to , investors for a new funding round after series A and B are hard to find. P said that in the first half of 2017, a lot of startups turned to blockchain, and a good portion of them more or less raised fund from institutional investors （most are seed round and angel round funding）.
“ I want to sell the equity of unreliable blockchain projects, so do those investment firms.”Mr. P said.
Given that the cryptocurrency market has remained relatively low since the beginning of this year and an increasing number of scam projects are disclosed, many projects in his basket fail to reach the expected value.
In order to dump the cryptocurrency quickly, big names in the industry began to create a hype around blockchain during the Spring Festival through media play-up in China. As the technology gets increasingly hot, a large number of negative reports went viral online, and some articles even stated that the majority of blockchain projects are scams, which led to many individual and institutional investors to lose confidence of the whole industry.
With China’s ongoing efforts to clamp down on cryptocurrency, many projects can hardly find new investors, especially after the Spring Festival of this year.