Exclusive: Billionaire investor Draper to participate in blockchain token sale for first time

Mon May 15, 2017 8:16am EDT
 
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By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - Billionaire venture capitalist Tim Draper soon plans to take a step that even he, a long-time bitcoin aficionado, has eschewed to now: buying a new digital currency offered by a technology startup.

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 Tezos slated later this month.

Tezos, a new blockchain platform launched by a husband and wife team with extensive Wall Street and in hedge fund backgrounds, will launch the ICO on May 22. Draper will also invest in U.S.-based Dynamic Ledger Solutions Inc, the creator of Tezos, but did not disclose details.

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 lack of regulatory oversight for ICOs.

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 run-away performance of the original cyber currency, bitcoin BTC=BTSP, 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 Tezos' token offering.

"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 Tezos is one of those tokens."

Most traditional venture capital firms are prohibited by agreements with investors from deploying cash into such high-risk assets as digital currencies.   Continued...

 
Venture capital investor Tim Draper speaks at a panel in Beverly Hills, California August 5, 2015. REUTERS/Danny Moloshok