Abstract
This study explores the determinants of initial coin offering (ICO) success, where success is defined as the amount of capital a project could raise. ICOs are a tool for startups in the blockchain ecosystem to raise early capital with relative ease. The market for ICOs has grown at a rapid pace since its start in 2013. We analyze a unique dataset of 278 projects that finished their ICOs by August 2017 to assess determinants of funding success that we derive from the crowdfunding and venture capital literature. Our results show that ICOs exhibit similarities to classical crowdfunding and venture capital markets. Specifically, we identify resemblances in determinants of funding success regarding human capital characteristics, business model quality, project elaboration, and social media activity.
Highlights
Understanding the role of blockchain-based initial coin offerings (ICOs), which are claimed to provide startups with a new form of financing, is of increasing importance both from a practical (Clayton 2017) and a scholarly perspective (Conley 2017)
This study explores the determinants of initial coin offering (ICO) success, where success is defined as the amount of capital a project could raise
This study of the ICO phenomenon adds to existing research by evaluating how this new ecosystem compares to existing processes in venture capital (VC) and crowdfunding financing
Summary
Understanding the role of blockchain-based initial coin offerings (ICOs), which are claimed to provide startups with a new form of financing, is of increasing importance both from a practical (Clayton 2017) and a scholarly perspective (Conley 2017). One major reason is that via the use of the underlying blockchain technology, ICOs enable startups to raise funds from investors around the globe without the need for minimal contribution levels. Another reason is that the tokens sold can usually be transferred immediately and traded on global cryptocurrency exchanges that provide liquid secondary markets and operate 24 h a day and seven days a week
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