By Ang Gao
When China banned initial coin offerings, or ICOs, in September last year, a number of Chinese blockchain projects started looking for ICO opportunities abroad but encountered difficulties including foreign regulations, legal issues and language.
That was when Minhui Chen, who graduated from Columbia University in 2015 and was working as a consultant at Ernst & Young, sensed an opportunity.
“We saw a huge demand for consulting business at that time,” Chen said. “There were plenty of good Chinese projects with good technologies but lacked overseas experience.”
Global Blockchain Innovative Capital, or GBIC, founded by Chen and two friends from Columbia, started consulting for these projects and helping them connect with overseas cryptocurrency exchanges, investors and legal consultants. They also helped them in building token communities and expanding overseas.
One Chinese blockchain team that contacted GBIC consisted of several PhDs in artificial intelligence but none of them could speak English. GBIC designed an ICO plan including services ranging from building connections with cryptocurrency exchanges and investors to finding interpreters at roadshows at Columbia and Stanford University. The blockchain company then executed an initial coin offering, and its token price increased around 30 times, according to Chen.
His firm, he says, has multiple talents. It consists of 22 people in New York, Shanghai and Korea. Among the ten in New York, nine graduated from Columbia University and one from MIT, which makes the team “so Ivy”. Some worked on Wall Street as traders and others have experience in private equity investment firms.
“We are a combination of Chinese and English genes,” Chen said. “We can speak good Chinese and have received education in the U.S., which makes us easily connect people from these two countries together.”
Now the consulting industry of blockchain is still “messy,” said Terence Che, another founder of GBIC. There is no unified standard and consulting firms are of uneven quality.
“Our goal is to become McKinsey of blockchain world,” said Che. “We hope companies will first think about us when they are looking for consulting, marketing and token community design services.”
On March 1 this year, a new company, Block 72, was separated from GBIC to operate as an independent consulting business, while GBIC continues to focus on investment. The current valuation of Block 72 is $50 million, Chen said.
“We want to make our $1 more valuable than others’ $1, even $10, by providing consulting business,” Chen said. “Consulting is a post-investment service and will maximize our mutual benefits.”
Chen sees good timing as another essential reason behind their success. At the beginning of 2017, Chen and his friends wrote codes to do arbitrage, buying cryptocurrencies in the U.S. market and selling them in China at a higher price. They made 10 percent of every transaction and earned their first million, Chen stated.
Then the ICO market started to boom, Chen said. The company accumulated wealth at “a very fast speed.”
All team members quit their jobs around mid-2017, including Wall Street traders who earned upwards of $400,000, according to Chen.
“Our entrepreneurship and decisiveness are critical to our team spirit,” Chen said. GBIC already has $50 million assets under management, he declared. So, on top of the valuation of the consulting business, the entrepreneurs are looking at a cool $100 million.
GBIC invested in Neo Smart Economy, a project that utilizes blockchain technology and digital identity to digitize assets and automate a company’s management with smart contracts. Neo’s token price was only around $2 when GBIC invested in early 2017, but it soared to about $140 before receding to $57, according to Chen.
But blockchain resources are highly centralized, and the process of due diligence is different from that in traditional industries. So, after several investment failures, Chen and his partners learned to invest in projects with experienced founders.
“Most of the resources are controlled by very few people, especially cryptocurrency exchanges,” Chen said. “Experienced founders who are in the industry for a long time always have more resources and will stay resilient through ups and downs.”
Hope Liu, the founder of Eximchain, a supply-chain-focused blockchain startup, said GBIC “delivered more than expected,” as Chen and his partners provided technical support and helped Eximchain build its token community. Eximchain has raised $20 million from a group of investors, according to the Coindesk website.
“They always seek to maintain a long-term relationship with us by offering best resources and being very flexible,” Liu said. “Although they are young, they are very devoted and professional.”