Six years ago, in 2017, the cryptocurrency world was in the midst of an unprecedented boom—the era of Initial Coin Offerings (ICOs). During this time, blockchain startups could launch new digital tokens and raise millions, even tens of millions, of dollars within hours. It was a period marked by rapid innovation, immense wealth creation, and, unfortunately, a fair share of hype and failure. Among the voices calling for caution during that frenzy was Changpeng Zhao (CZ), founder of Binance, who published a now-viral post on Steemit titled “I Don’t Like Big ICOs.” Recently, CZ revisited that post—offering not only a reflection on early crypto fundraising trends but also a sobering case study of what can go wrong when startups raise too much, too soon.
The Pitfalls of Raising Too Much Too Soon
In his original 2017 article, CZ argued that while large ICOs bring immediate visibility and capital, they come with significant long-term risks. At first glance, raising tens of millions of dollars seems like a dream come true for any startup. But CZ questioned whether most crypto projects truly needed such massive funding at an early stage—and whether having it actually helped or hurt their long-term success.
👉 Discover how smart funding strategies separate lasting crypto projects from short-lived hype.
His central argument was simple: start small, grow sustainably. When a team raises $50 million or more before launching a working product, several dangerous dynamics take hold:
- Loss of urgency: With ample funds in the bank, teams may lose the hunger and drive that fuel innovation.
- Misaligned incentives: Founders might prioritize marketing over development, focusing on maintaining token price rather than building real utility.
- Market skepticism: Investors grow wary when a project’s valuation peaks at launch, only to decline steadily afterward—a pattern all too common in the post-ICO landscape.
CZ pointed out that many of these large ICOs reached their highest market value on day one. From there, it was often a slow descent into obscurity. Without continuous progress or product milestones, investor interest fades, development stalls, and the project loses relevance.
A Cautionary Tale: From $100M Ambition to Sub-$1M Reality
One specific example CZ highlighted—without naming the project—was a team that aimed to raise $100 million during the ICO boom. At the time, their whitepaper, team, and vision generated significant buzz. They succeeded in attracting attention and capital… but failed to deliver meaningful results.
Today, that same project has a market capitalization of less than $1 million—a staggering 99%+ drop from its initial aspirations.
"Someone sent this to me, an article I wrote 6 years ago. The project mentioned currently has a market cap of less than $1m. It's a good group of guys, but probably distracted by too much money.
Start small and grow big, not the other way around."
— CZ 🔶 BNB (@cz_binance), July 23, 2023
This dramatic fall isn’t just about poor token performance—it reflects deeper issues in project execution, governance, and focus. According to CZ, the team wasn’t necessarily incompetent or malicious. In fact, he described them as “a good group of guys.” The problem? They were likely overwhelmed by the sheer scale of capital they received early on.
With millions in funding before proving product-market fit, decision-making slowed, priorities blurred, and momentum stalled. Instead of iterating quickly and responding to user feedback, they became bogged down by bureaucracy and over-engineering.
Why Sustainable Growth Matters in Crypto
The story underscores a broader truth in the blockchain space: capital efficiency matters. In traditional tech startups, venture capital is typically disbursed in rounds—seed, Series A, B, C—each tied to specific milestones. This staged approach ensures accountability and forces teams to prove progress before accessing more funds.
In contrast, many ICOs flipped this model on its head: full funding upfront, with little accountability. While this empowered some teams to move fast, it also enabled complacency.
Projects that survived and thrived—like Binance itself—often followed a leaner path. They launched with modest funding, focused on core functionality (e.g., exchange speed, security, liquidity), and scaled based on real user demand.
Core Keywords:
- Crypto fundraising
- ICOs
- Blockchain startups
- Token valuation
- Market capitalization
- Sustainable growth
- Changpeng Zhao (CZ)
- Binance
These keywords reflect both historical context and ongoing relevance in today’s digital asset ecosystem. As new fundraising models emerge—such as IDOs (Initial DEX Offerings) and launchpads—the lessons from the ICO era remain vital.
Frequently Asked Questions (FAQ)
Q: What is an ICO?
A: An Initial Coin Offering (ICO) is a fundraising method used by blockchain projects to raise capital by selling newly issued cryptocurrency tokens to investors. It’s similar in concept to an IPO but operates in the decentralized space and is largely unregulated.
Q: Why did so many ICOs fail after 2017?
A: Many ICOs failed due to oversaturation, lack of product development, poor governance, and excessive fundraising without clear use cases. Additionally, regulatory scrutiny increased globally after 2018, limiting operational freedom.
Q: Is raising a lot of money always bad for crypto startups?
A: Not necessarily—but timing and execution matter. Early overfunding can lead to mismanagement and loss of focus. Successful projects often balance funding with measurable development goals and community engagement.
Q: How does CZ’s philosophy apply to today’s crypto landscape?
A: CZ advocates for lean operations, rapid iteration, and user-centric growth. These principles are increasingly relevant with the rise of decentralized finance (DeFi), Web3 platforms, and community-governed protocols.
Q: Can a project recover after losing most of its market cap?
A: Yes, though it’s challenging. Recovery requires transparent communication, strong technical updates (like rebranding or protocol upgrades), active community rebuilding, and sometimes token burns or restructurings.
Lessons for the Future of Crypto Innovation
As the industry matures, the narrative is shifting—from “how much did you raise?” to “what are you building?” Investors and users alike are demanding real utility, transparent roadmaps, and accountable teams.
CZ’s reflection serves as both a warning and a guidepost:
- Avoid premature scaling.
- Prioritize product over promotion.
- Let market demand—not hype—drive growth.
Moreover, modern tools like token vesting schedules, milestone-based funding releases, and decentralized governance help align incentives between founders and holders.
👉 Learn how today’s most successful blockchain ventures combine innovation with financial discipline.
The collapse of that once-high-flying $100 million ICO dream isn’t just a footnote in crypto history—it’s a textbook example of why culture, focus, and capital discipline matter more than raw funding numbers.
As the space evolves beyond speculative mania into sustainable innovation, the mantra remains clear:
Start small. Build value. Grow responsibly.