Abstract
The Initial Coin Offerings (ICOs) subject has been gaining relevance due to its novelty, due to the capital amounts involved in the projects, as well as the disruptive technology and methods involved. ICOs are a disruptive way to finance new projects which involve high risks and which are mainly technological. This way to finance a project has been compared to others, namely, crowdfunding, venture capital or Initial Public Offerings (IPOs). Nevertheless, ICOs have very specific characteristics which make them unique. We have studied the ICO projects and developed a literature review on the topic. Building on the Human Capital Theory (HCT), we have also studied the importance given to the project’s team and its perceived impact on projects’ success. Our contribution to fill in this literature gap was to develop an econometric model which measures the impact of team’s characteristics on the success of a project. The database was collected with the combination of two data sources and is composed of 3158 profiles and 340 ICO projects. We have concluded that team variables are significant contributors to project’s success. Our data suggests that people’s location contributes to projects’ success as well as promoters’ networks. The ratings attributed by external parties to the project are also indicators of success. Several control variables such as the implementation of thresholds to investment, the number of currencies accepted, the platform in which the ICO is developed, the existence of bonus schemes and the year of the project were found to be statistically significant having an impact on projects’ outcome.
Highlights
Traditional financing ways have been dominating the investment arena but new ways such as crowdfunding have been emerging
The Initial Coin Offerings (ICOs) subject has been gaining relevance due to its novelty, due to the capital amounts involved in the projects, as well as the disruptive technology and methods involved
The ICO projects have been gaining importance due to their novelty (OECD, 2019) and due to the capital amounts involved in the projects (Coinschedule, 2020) and due to the regulation challenges they pose (Dostov et al, 2019)
Summary
Traditional financing ways have been dominating the investment arena but new ways such as crowdfunding have been emerging. The similarities and the comparison done between ICOs and other financing forms such as crowdfunding, venture capital or Initial Public Offerings (IPOs) (OECD, 2019) the first have unique characteristics which distinguish them (Kranz, Nagel, & Yoo, 2019). Several control variables revealed to be significant contributors to the success of projects, namely, the implementation of thresholds to investment, the number of currencies accepted, the platform in which the ICO is developed, the existence of bonus schemes and the year of the project.
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