Gagarin Capital co-founder on what Silicon Valley thinks about ICOs

Nicholas Davidov is the man whom The New York Times described as the first person new Russian technological talents ask for help when moving to San Francisco. He is also an investor in Wallarm, the perspective cybersecurity firm based in San Francisco. Mr. Davidov co-founded the Gagarin Capital fund, known for conduction of successful sell of Belarusian startup to Facebook and another sell of a Russian startup to Google. He has lately expressed his views on initial coin offerings and explained why the venture capitalists from Silicon Valley do not trust this investment mechanism.

According to him, ICOs are currently made by people with vague projects, primarily aiming to attract easy money from cryptocurrency enthusiasts, not some serious investors. Mr. Davidov also reminds that there are no clear regulative measures towards ICOs – the rights of token holders are unspecified in the legal frameworks, and it is unclear who would be responsible for guaranteeing the compensation of potential losses. Nobody knows how to rate ICOs yet, which is another serious factor that makes ICOs a one-way ticket, Nicholas Davidov notes.

The venture capitalist predicts that his business colleagues would start engaging with initial coin offerings 3 or 4 years later, when the market becomes sufficiently regulated. Explaining the reasons of drastic cryptocurrency rise in Russia, he reminded there is no real venture market there and coins have become a hope for a quick profit, while he himself gained much more money on startups investments than on Bitcoin – and he bought some back in 2011.