Billionaire venture capitalist Tim Draper soon plans to take a step that even he, a long-time bitcoin aficionado, has eschewed until now: Buying a new digital currency offered by a technology start-up.
Draper, an early supporter of bitcoin and its underlying blockchain financial ledger technology, told Reuters in an interview he will for the first time participate in a so-called "initial coin offering" (ICO) of
Draper, who scored big as an early backer of Skype and Baidu, becomes the first prominent venture capitalist to openly embrace initial coin offerings. This would be a significant stamp of approval for this new financing mode of blockchain start-ups. Some investors have expressed concern about
Over the last year, blockchain start-ups have been raising cash by creating and selling their own currencies or tokens in unregulated offerings that bypass banks or venture capital firms as intermediaries. Interest in these deals has been stoked by the runaway performance of the original cyber currency, bitcoin, which has surged more than 67 percent in the last six weeks to hit a record high.
"The best thing I can do is lead by example," said Draper, on his plan to participate in
"Over time, I actually feel that some of these tokens are going to improve the world, and I want to make sure those tokens get promoted as well. I think
Most traditional venture capital firms are prohibited by agreements with investors from deploying cash into such high-risk assets as digital currencies.
But Draper said the contract terms with his investors allow investing in pretty much any vehicle.
"I think most investor contracts did not anticipate something like an ICO," said Draper. "But we did anticipate that certain things are going to happen and finance is going to be transformed."
Draper said his firm has specifically carved out money for non-traditional investments.
Most software platforms provide for automated updates, but blockchains remain notable exceptions because update procedures are typically centralized.
Unlike previous ICOs, Kathleen Breitman said,
"What we're going to do is allow as many people who want to buy into the