• Bianca Chen

Genius or Trickster? Crypto Investor Shuoji Zhou Has Something to Say

Updated: Sep 5, 2018

Crypto Asia 100 Vol.5

I first met Vincent (Zhou Shuoji) through a token project's Wechat group last year. Since then, I started noticing the name of his young investment firm, FBG Capital, here and there. It didn’t take me long to realize that he had not only developed a strong network in China’s blockchain industry, but he was also very involved with insiders and projects worldwide. Very soon, FBG became the company that people in the circle were following and discussing. However, Vincent had kept a low profile until the feature story in the recently released August issue of Forbes magazine which brought Vincent and his FBG Capital squarely into the spotlight.

The article didn’t only appraise FBG’s huge success over a short period of time, but also questioned its relationship with exchanges and the way they had been making money by quoting allegations made by FBG’s competitors and other speculators. What did Vincent have to say about his business and his investment in crypto? I was very curious. I gave him a call and would like to share what he told me.

BIANCA: As the second Chinese crypto figure to appear in Forbes after CZ of Binance, how do you feel about the coverage?

VINCENT: The crypto world is seeking mainstream recognition. The Forbes report helps traditional financial institutions better understand the ways of this field. It also indicates we have grown to be an industry leader. For that matter, I feel excited.

BIANCA: Report says FBG turned $20 million into $200 million in assets in a year. How did you earn your first pot of gold? And how big has your business become?

VINCENT: We went in full force in September 2015, starting self-funded. Thanks to the rapid growth in the early days of cryptocurrencies, we have become an international organization of 50 employees. Our participation in ICOs in 2017 got us lucrative returns. So trade and ICO--our first pot of gold were from those sources.

BIANCA: How many divisions do you have right now?

VINCENT: As one of Asia's largest digital asset management firms, we position ourselves to be the investment bank in the blockchain. Our business cover investment, consulting, asset management, everything a traditional investment bank would do. We will push out new services along the businesses of investment and trading as we move forward.

BIANCA: Now let's talk about the projects you invest in. There have been allegations that you weigh flash over substance, possibly because those projects are easier to hype. What kind of selection criteria do you follow?

VINCENT: Much like a traditional VC, We do fundamental analysis. We will look into the team's understanding of the blockchain, how original and innovative their technology, as well as their resume. We tend to put more trust in teams with richer experiences in the industry. We are also concerned about execution, sustainability, and market feedback. Overall, our investment strategy will adjust to the market trends.

BIANCA: Another allegation is you get "in and out of investments quickly." How long is FBG's average exit time?

VINCENT: We don't have a fixed exit time. It is in our best interest to help the projects grow continually. Some of the projects we invested in since last April, and we haven't withdrawn yet. For others, we feel they are going in a different direction, and then we will consider backing out. We would love to run a marathon with the project of our choice. In fact, since the founding of FBG, we have had a prolonged exit time.

BIANCA: What kind of post-investment support does FBG provide?

VINCENT: We have offices in the US, UK, South Korea, Singapore and China. It helps us integrate local resources to help these projects to connect, to accelerate their growth. Our strategy varies from project to project.

BIANCA: You are well-connected in the crypto circle. Your partnership with large exchanges such as Huobi, does it benefit the projects you invest in? Is it part of your plan to support those projects with your connects?

VINCENT: Every crypto exchange has plenty of external resources. We have no privilege in this regard. Per their request, we will connect the project teams to legal services, agencies, and of course exchanges. But we are cautious with the moves. Exchanges will get leads from us, but in the end, each forms its own independent judgment [as to which project gets listed]. All we do is introducing the teams and nothing more.

BIANCA: For many individual investors, crypto investment is full of pump-and-dump schemes that leave them with heavy losses, vividly described as "chive harvesting." A WSJ article reveals groups using Telegram for crypto price manipulation. How long do we have to wait till the industry, in general, reaches regulatory compliance?

VINCENT: For any emerging industry, bubbles are inevitable. ICO was in every conversation in 2017; now people are talking about compliance. FBG Capital has worked hard toward the goal. Many governments around the world are trying to understand and regulate cryptocurrencies. It starts with mainstream acceptance and mass adoption. But I believe there is still a long way to go until the industry as a whole realize regulatory compliance. Some fundamental issues are waiting to be solved.

BIANCA: What kind of issues? Can you elaborate?

VINCENT: First of all, what constitutes securities in crypto? There is never a clear definition. Then, the custody platforms set barriers for institutional investors. They are essential problems, and we have paid close attention to them.

BIANCA: FBG also established FBG ONE to target the secondary market. Does it offer follow-up services for your business in the primary market?

VINCENT: Our team for the secondary market has always worked independently. It was there for a while. We just rebranded it under FBG ONE recently. Our primary market department and secondary market department act separately, with a firewall between them. So they don't work in tandem. Granted, they will help projects by providing consultation, given their experiences. But it has nothing to do with any of our investment decisions.

BIANCA: What opportunities do you sense in the secondary market?

VINCENT: Last year, everyone was more interested in ICO investment. But when the asset volume is big enough, the secondary market will offer more options, trading, asset allocation, and fixed income. I think it is similar to traditional industries. Usually, the size of the primary market is relatively small compared to the secondary market. I believe if crypto lives on, the secondary market will grow larger.

BIANCA: When do you think this bear market will end?

VINCENT: It all depends on the baseline. Participation and the amount of funds certainly dropped compared with the beginning of the year. But compared with this time last last year, the trade volume actually increased a lot. Also, many unfit companies will be eliminated during the process. We will use this period to examine which tokens have lasting utility and store of value. It is hard to tell when this bear market will end. In all honesty, not all assets will set of when the next bull comes. Market changes. New types of assets will probably flourish when the time comes.

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