What determines success in initial coin offerings?

Abstract

ABSTRACT We analyse the determinants of success for 630 ICOs undertaken from August 2015 up until the end of December 2017, a period in which the market for ICOs grew to an unprecented level. We find evidence that ICOs are more successful in raising funding when they disclose more information to investors (i.e. have a higher profile rating), have a higher quality rating by cryptocurrency experts, have a pre-ICO GitHub repository, organise a presale, refrain from offering bonus schemes, have shorter planned token sale durations and have a larger project team. ICOs that disclose more information to investors and that have a higher quality rating at the time of the campaign show stronger ex-post performance. Longer-term project success is positively impacted by having a pre-ICO GitHub repository, a shorter planned token sale duration and having a larger project team at the time of the ICO, although these results depend on the ex-post success measure used. We conclude that for entrepreneurs it is important to make an ICO as transparent as possible and that profile and expert ratings are a valuable means to overcome the information asymmetry problems associated with token sales.