Binance: the fastest profitable unicorn in history?

By San Eng

Updates:

Most people outside of the crypto world — which is 99%+ of the population have never heard of Binance. We know Uber, AirBNB, Instagram; Chinese people know Didi, Xiaomi, Mobike and a slew of others. CB Insights which published “The Global Unicorn Club” showed Coinbase but Binance was nowhere to be found, not even in their “future unicorns” list.

So what is Binance? According to LiveBitCoinNews:

Their “Evolution of Binance” graph highlights Binance’s amazing growth in less than 5 months to become a top 3 cryptocurrency exchange (though, according to Binance founder & CEO Changpeng Zhao (“CP”) they are now #2, just behind Bitfinex, for now).


Yet, that’s the side story.

Most industry observers would agree given Binance’s quality platform and business practices, it was just a matter of time before they seized market leadership.

The real story, we believe, is that Binance is probably the fastest profitable startup to achieve unicorn status (private company with $1bn+ valuation) in history.

Binance is valued at not $1bn+ but closer to $2bn+.

And they did it in less than 6 months. Yes, you read it right, 6 months.

Per chart below, some 20 US private firms became unicorns in under half a year (if anyone has a list of the international ones, please share it with us). None, we believe were profitable at the time.

Source: CB Insights

We believe the other “members” were all loss-making at the time of being minted unicorns. In crypto, half a dozen “entities” have raised 9 figure ICOs with coins trading at billions plus market caps.

However, they have no products or revenues. In contrast, while we don’t have access to the accounts, we know Binance is highly profitable. Their core business is simple to understand — to be the most robust, safe, service-oriented, crypto-currency exchange, helping investors and traders buy/sell, while taking a commission.

What determines its market cap? In August, Coinbase raised $100m from prominent VCs at $1.6bn, confirming its status as the first “Bitcoin” unicorn. While their business models are not identical, Binance likely has surpassed Coinbase in trading volume and at its current rate should take global #1, given that it operates in Asia (Japan/China) and Asia is 40%+ of global Bitcoin trading. Binance is also in a good position to be a major “ecosystem” player in the region and globally.

We can also argue Binance’s valuation is even more “real” than Coinbase’s — though both have passed $1bn valuations in private venture funding, Binance actually has tokens (BNB) that trade 24/7 at the whim of supply and demand. As of today, BNB trades at about $8 with 99m tokens circulating given the “float” market cap of $800m+. Earlier this week, BNB shot north of $10, valuing the float at $1bn+. The circulating supply along with BNB held by founders, insiders and early investors is 199m, hence BNB’s value is closer to $2bn. Note Binance has other businesses not captured by its stock value.

BNB has soared, in recent weeks, very much in line with its customer acquisitions, coins traded and trading volume:

Source: various, Digital Alchemy Holdings

Unless we missed another firm, Binance can go into history books as the fastest profitable unicorn in history, achieving $2bn+ valuation in under half a year. Incredible.


So how did they do it?

The success of Binance is tied inextricably to the hyper growth of cryptocurrencies, but credit is due to its founder and CEO Zhao Changpeng (“CP”). Binance’s ascent certainly has good luck on its side but the seeds of its success were sown years ago — including CP’s prior work in Wall Street software trading systems, Chinese Bitcoin startups, and many, many poker hands.

We’ll save this story for a later time.

Sharing a Xmas teppanyaki meal with CP in Tokyo. We agreed the best word to describe Binance’s rise as “surreal.”

Disclaimer: Digital Alchemy Holdings holds and is long BNB long term.