Changpeng Zhao's $10 billion investment firm weighing allowing outside funds

Changpeng Zhao’s $10 billion investment company is weighing whether to allow outside investors in the future.

YZi Labs, created in January after being spun out of Binance, has grown into one of the world’s largest crypto investors. It currently manages Zhao’s fortune and funds from a small group of early Binance executives, including Yi He.

The company previously took in around $300 million in outside investment in 2022, but later returned part of those funds. YZi focuses on early-stage ventures across digital assets, biotech, and artificial intelligence, and is exploring the option of turning into a more traditional investment fund.

“There’s always a lot of external investors interested and we will eventually consider turning it into an external-facing fund. We just think it’s not there yet,” said Ella Zhang, head of YZi Labs, in an interview with the Financial Times.

“When we have that expertise, we have the confidence level, we’ll open up for external investors,” she explained, adding that managing outside capital would be “a huge responsibility.”

The firm would face stronger oversight from regulators

CZ launched Binance in 2017, building it into the largest cryptocurrency exchange in the world and amassing an estimated fortune of more than $80 billion through his majority stake. Later, CZ stepped down as Binance chief and served four months in prison last year. He is now reportedly seeking a presidential pardon.

Under Trump’s administration, US regulators have shown a more favorable stance toward digital assets. Zhang said the Securities and Exchange Commission recently requested a private showcase of companies backed by YZi Labs after its chair was unable to attend a demo day at the NYSE. However, if YZi Labs decides to bring in US-based investors, the firm may face stronger oversight from regulators.

She added that crypto entrepreneurs who had left the US during Joe Biden’s presidency were now coming back to Silicon Valley. “Paul Atkins and other commissioners, they are very open minded,” Zhang said.

Zhang admitted that handling $10 billion in crypto investments is a challenge. “CZ said to me ‘your challenge is to deploy.’ It’s just so hard to find so many good enough assets to meet our criteria,” she said.

Zhao remains the largest Binance shareholder

Although Zhao is barred from managing Binance, he is the biggest shareholder and a vocal supporter, particularly of BNB, the exchange’s native token.

Zhang declined to identify the investors who contributed in 2022 but confirmed some of the money was later returned. “The reason we returned is because the funds we were managing already were massive,” she said. “The demand is very high, a lot of external [investors] want to invest alongside us. For the majority of the projects we invest in we’re not in a rush to exit . . . it’s hard to deliver what they expect.”

YZi has recently backed several crypto treasury companies, which raise money publicly to purchase tokens. It is supporting a $1 billion transaction involving former executives from Chinese Bitcoin miner Bitmain. Furthermore, it led a $500 million fundraising in July to convert a Nasdaq-listed vaping company into a BNB treasury vehicle.

According to Zhang, YZi Labs received more than 50 pitches from teams wanting to raise token-based funds during the summer. Around 70% of its portfolio is in digital assets, though interest in AI and robotics is on the rise.

“CZ’s vision is that robotics will help human beings to do things and their transactions will be [done] through crypto wallets,” she said.

The firm’s 12-person team, she added, takes a “super long-term” view. “We’re not like other VCs calculating multiples on an annual basis.”

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