Traditional VCs will bet more on crypto projects in future: Binance Labs’s Nicole Zhang

With digital assets catching the imagination of the young generation globally, traditional VCs will turn to crypto projects to place their bets on in the future, according to Nicole Zhang, Investment Director at Binance Labs.

“It is difficult to predict the future, but what I’ve observed so far is that all the large traditional VC funds are hovering over crypto and web3 [projects]. The reason is that crypto is the right way to channel the audience,” she said in an interview with e27, on the sidelines of the Binance Blockchain Week concluded in Dubai last week.

Referring to a study conducted by Forbes in the US, which found about 40 per cent of young Americans make only crypto investments nowadays, she said: “It is a significant number, and it has alarmed traditional VCs. They realise they need to grab the heart of the younger generation because they’re the future.”

Binance Labs is the investment and acceleration arm of Binance, a global leader in crypto and blockchain. It has accelerated and invested in more than 100 startups/projects. Its notable investees include Forbes, Sky Mavis (Axie Infinity), and Coin98.

Also Read: Sky Mavis raises US$150M led by Binance to reimburse users hit by Axie breach

The crypto giant invested from its balance sheet in the initial years (from 2018 to late 2021). But afterwards, it formed a separate fund and raised funds from several Limited Partners (with Binance being the biggest LP). Zhang said that the firm plans to make more than 200 investments, covering early-stage and late-stage incubation projects and over-the-counter deals.

Zhang, based in Singapore, also talked about Binance’s ongoing conflicts with different governments across the world. In the past year or so, the company came under global scrutiny and had faced licensing issues in many countries, including Singapore. She said the firm is working to iron out the differences with governments. “My colleagues had to move from country to country to talk to the authorities. It is about how you understand the regulations [in respective countries], and we are learning fast. And we need to abide by the rules, reform ourselves, and we want to be friends with every single country.”

“Our team has been actively finding the know-how to get the proper licence and collaborate with different regulators. The governments also seek collaboration opportunities with us. We run a famous incubator, and governments want to co-incubate with us and find some projects that can help them do more crypto projects. It essentially contributes to their GDP,” the Binance Labs Director mentioned.

She further said that web3 games are gaining strong adoption in Southeast Asia. Referring to the growing popularity of Axie Infinity and YGG games, Zhang said NFT games are an excellent way to incentivise participation. Sky Mavis, for example, has raked in hundreds of millions of dollars in venture funding from notable VCs and is popular in countries like the Philippines.

“Axie Infinity is easy to get your hands on and addictive. The game has encouraged the participation of people who have relatively more free time. The entry barrier was quite low at the beginning. We witnessed a lot of gaming guild uprisings, especially YGG, which comes from the Philippines. They have good capabilities in organising player groups. It was a good model, making Axie Infinity an astonishingly successful project,” said Zhang, who previously headed sales, marketing and IT development at Singapore Press Holdings.

Web3 games are also gaining a lot of traction in Vietnam. While we see growing adoption of metaverse games in the west, the Southeast Asian region is also catching up, particularly in Vietnam. “Surprisingly, because of the success of the likes of Axie, we see strong adoption of metaverse games in Vietnam. The Vietnamese community is diligent and has a strong learning urge. The passion and involvement of users for web3 in the country are crazy,” she concluded.

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