Initial Coin Offerings Success Research Articles

Fundamental analysis of Initial Coin Offerings

AbstractThis study endeavours to discern the pivotal factors contributing to the success of initial coin offerings (ICOs) on a global scale. Through a comprehensive analysis of ICO characteristics, we explore the intricate relationship between these attributes and the ultimate success of ICO projects. Our empirical findings show that projects that have secured presale funding, coupled with comprehensive token sale information, exhibit a markedly increased likelihood of achieving ICO success. We also employ the automated machine learning method to offer valuable insights into the potential determinants of ICO success. Furthermore, we delve into the underlying rationale behind ICO success by employing SHAP values to discern the relative importance of various ICO characteristics and examine the correlations among these attributes. This research contributes to a deeper understanding of ICO dynamics and offers empirical evidence regarding the critical factors that shape the success of ICO projects. Such insights hold significant implications for both industry practitioners and policymakers seeking to navigate the evolving landscape of blockchain‐based fundraising initiatives.

An exploratory look at the role of ownership in initial coin offerings (ICO): Different audiences and ICO success

Initial coin offering (ICO) is a Web-3 based financing method for ventures, which allows them to use digital assets (e.g., tokens) to raise capital. During an ICO, the entrepreneur has control on ownership; they can choose to issue a very small number of tokens which would allow them to keep “their skin in the game” and retain ownership, or issue all the tokens they hold, which would distribute ownership to investors and have a community-decentralized orientation. While previous literature has identified several factors of ICO success, they have not delved into the role of ownership in ICO success. In this study, we explore whether retaining or distributing ownership during an ICO is more beneficial for raising capital. We find a two-pronged explanation. When looking at ICOs maintaining a higher level of ownership, entrepreneurs are catering to corporate-market logic investors, and we see a U relationship where the optimal percentage in which the entrepreneurs show they have skin in the game at the same time as giving enough to investors. But then, there are ICOs distributing most of its ownership in which entrepreneurs are attracting community-oriented investors, and as such, the higher the distribution the higher the investment. We propose that this is related to how there are different investors audiences’ that will value different practices and ideals and choose differently on what types of projects to invest in. Our research elucidates this new funding source. Nonetheless, future research should investigate these exploratory findings.

Giving coins for free: Does digital outsourcing of technical and advisory support influence the success of initial coin offerings (ICOs)?

AbstractInitial coin offerings (ICOs) have emerged as a novel mechanism for financing entrepreneurial ventures. This relatively new application of blockchain technology allows a venture to raise money directly from the crowd by creating and selling its own coin or utility token in exchange for future use of this coin to purchase the services and products the venture is aiming to create. During the ICO ventures often use digital technologies to outsource services and build social capital. Despite the explosive growth of ICOs, little is known about the impact of these outsourcing strategies on the ICOs fundraising outcome. This paper presents explanatory research to better understand the role and potential impact of ICO strategies in outsourcing technical and advisory services by offering coins for free. More particularly, using data from 2081 ventures that sought to raise an ICO over the period 2016–2018, we examined the extent to which ventures can influence the likelihood of ICO success by adopting strategies aimed at outsourcing services and building social capital, namely by providing free coins to outsource expertise and by adapting social media campaigns. Findings suggest that although the use of professional social media platforms is associated with both ICO success and a higher level of fundraising, over‐generous outsourcing strategies had a negative impact on the ICO's likelihood to succeed.

A DEA And Machine Learning Based Platform for Investigating Success of Initial Coin Offerings (ICOs)

A DEA And Machine Learning Based Platform for Investigating Success of Initial Coin Offerings (ICOs)

Fear sells: On the sentiment deceptions and fundraising success of initial coin offerings

Retrieving information from an intensive hand-collected whitepaper data library covering 5,033 ICOs launched before 2020, we analyze the determinants of ICO success as measured by the amount of raised funding. We assess the sentiment and readability in ICO whitepapers in addition to other information disclosures. Whereas we do not find any evidence for that the riskiness of ICO projects would lower the predicted amount of raised funding, our results strongly suggest that ICO investors are largely guided by emotions when making investment decisions. Contrary to earlier literature, we find a weak association between quality signals of whitepapers and its success.

Determinants of ICO success and post-ICO performance

Initial coin offerings (ICOs) have emerged as an alternative way of raising funds for entrepreneurial ventures to develop a new project or product. In this study, a comprehensive analysis is conducted on the determinants of ICO success and aftermarket performance of ICOs. Our evidence suggests that ICOs with higher ratings, shorter planned token sale duration, smaller share for token sale, larger number of experts and more members in the developing team have a greater likelihood of success and raising more funds. We also show that offer price and market sentiment play a major role in explaining longer term post-ICO performance. Yet, key to a successful ICO and post-ICO performance differ between boom vs bust periods in the cryptocurrency markets.

A document analysis deep learning regression model for initial coin offerings success prediction

Initial coin offerings (ICOs) provide an early-stage financing method for blockchain-based ventures. During the ICO process, whitepapers are important not only as promotional material through which ventures can demonstrate the technical and financial project details but also as references for investors. Persuasion theory and the related literature suggest that the presentation and order of information have a significant impact on the attitude of the audience. Therefore, in addition to projects’ metadata features, we construct a document analysis deep regression model (DADRM) to innovatively extract deep text and layout features from whitepapers. Based on a real-life dataset, we conduct a comparative study to assess the effectiveness of the proposed framework in predicting ICO success in terms of the funding amount. The empirical results show that our model that both extracts text content and retains the original 2D structure of the document can significantly reduce prediction error. Based on our proposed model, both ICO platforms and investors can prejudge the funding amount of cryptocurrency projects and mitigate information asymmetry. Additionally, this study demonstrates that both what is written in the business document and how the document is presented affect investor decisions.

Machine-learning forecasting of successful ICOs

The identification of ventures that are more likely to be successful is a complex task for equity investors, such that a mix of assessment criteria is typically employed. Machine learning (ML) techniques may provide valid support to investors in processing the set of available information. This paper applies ML to initial coin offerings (ICOs), which allows firms to raise blockchain finance through public online offerings. After implementing this novel approach to a sample of 383 ICOs launched between August 2014 and December 2019, we found an increase in forecast accuracy, from 54.3% when using standard Logit models to 72.8% when using ML techniques. Therefore, we contribute to the scientific debate and practice by introducing an algorithm-based approach that makes the analysis of whitepaper content available to individual investors. Importantly, we document that the structure of ICO white papers, a so far neglected dimension, is a significant determinant of the success of ICOs.

Initial coin offerings (ICOs) success: Conceptualization, theories and systematic analysis of empirical studies

Initial coin offerings (ICOs) have recently experienced an explosive expansion in entrepreneurial finance. This novel, crowd-based funding method has successfully attracted tremendous amounts of funds for both new ventures and established businesses. A growing body of research has explored the factors that shape ICO success, yet few studies have synthesized and integrated the findings of the fragmented literature. This paper incorporates signaling theory and a phase-based view of the ICO process to systematically review 78 empirical studies, published between January 2017 and January 2022, on the conceptualization, theories and determinants of ICO success. The review explores six main determinants of ICO success: the founder, ICO, venture, market, investors, and context. The founder initiates the ICO process by deliberately selecting this method for funding their business and choosing the type and quality of signals that both encourage investors and guide their decision to participate in and support the ICO project in different contexts. Based on this review, we develop a model for ICO success, tracking success determinants in each phase of the ICO process. Finally, we highlight agendas for future studies and implications for policy, theory, and practice development.

Blockchain-based entrepreneurial finance: success determinants of tourism initial coin offerings

ABSTRACT This study explores the factors affecting the probability of success of initial coin offerings (ICOs) with a specific focus on the tourism industry. ICOs emerged as a financial technology (FinTech) development and use blockchain technology. As a novel form of crowdfunding, ICOs are public offerings that can be used to raise capital for entrepreneurs and also have the potential to be a new financing method for tourism ventures with financing challenges. Although ICOs can represent a very substantial alternative financing method for today’s innovative business models, the phenomenon seems to be poorly understood. With this in mind, this study highlights the importance of blockchain technology and thus ICOs as an alternative financing tool for the tourism industry. In this context, 49 ICOs that ended between 05 July 2017 and 27 January 2021 were analysed by applying the logistic regression analysis method. The results show that the most essential signals of the probability of success of a tourism ICO are human capital, duration, acceptance of Bitcoin as the most popular cryptocurrency, and bonuses offered as an incentive instrument. The findings have useful practical implications for the determinants of ICOs’ success for both tourism entrepreneurs and contributors of tourism ICOs.

Initial coin offerings: an emergent research area

PurposeThe purpose of this paper is to identify the main insights current literature offers regarding initial coin offerings (ICOs) and the avenues for future research.Design/methodology/approachThe approach consists of a systematic literature review of 130 papers from the SCOPUS database published in English between January 2018 and December 2020, with supplemental semantic analysis of the abstracts to obtain key themes and concepts.FindingsRegulation and the determinants of ICO success are the main themes for current research and represent fruitful areas of continued scholarship. The research agenda in ICOs is just beginning and several topics and questions merit future inquiry: the behaviour of issuers and investors, the importance of human capital, the role of intermediaries and infomediaries and the use of signalling.Originality/valueTo the knowledge, this is one of the first systematic studies of current literature in ICOs. It provides a roadmap for future work on a phenomenon that will only grow in significance.

Initial Coin Offerings (ICOs): Debt or Equity?

Initial Coin Offerings (ICOs) have recently emerged as a novel source of fund raising for startup entrepreneurs. The ease and flexibility inherent to ICOs are notably significant incentives for founders looking to raise funds. The glaring success of many ICOs over the past few years has further helped cement ICO’s place as a worthy alternative to traditional fund raising mechanisms. The duo of debt and equity, though starkly different, have for long been established as the primary sources in corporate finance. Over time, it has become almost instinctive to assume any new fundraising mechanism will fit squarely into either boxes or at least be a mishmash of both. This paper attempts to explore the position, if any, of ICOs vis-a-vis the traditional capital raising options of debt and equity.

Predictability of ICO Success and Returns

Initial coin offerings (ICOs) provide a platform to issue tokens to the public. This study analyses the determinants of ICO success and listing day returns using a dataset of 341 executed ICOs. Funds raised under an ICO are negatively related to target funding size and positively related to Cryptocurrency usage and ICO quality. ICO listing day returns are negatively related to the amount raised, the time period of the offer and time delay to listing. In contrast, ICO listing day returns are positively related to Blockchain usage, ICO quality and the ICO success to raise the target level of funds.

Cyber risks and initial coin offerings: Evidence from the world

This paper examines the impact of cyber risks on ventures’ initial coin offerings (ICOs) results. We match novel data on national cybersecurity with hand collected characteristics of 1,654 ICO projects and discover that cyber risks are negatively associated ICO success. We further find that institutional quality, such as the protection of investor rights and the function of the legal system, attenuates this relationship.

Success factors in ICOs: Individual firm characteristics or lucky timing?

This study highlights the time dimension as a key success factor for fundraising with Initial Coin Offerings (ICOs). Previous literature suggests various company- or ICO-specific determinants for a successful ICO, such as a professional white paper helping to establish trust among investors. Alternatively, our empirical results suggest that “lucky timing” is the crucial factor in explaining ICO success in terms of total amount raised. Our additional analysis considering Google search activity shows that the highlighted time variation in ICO success can be explained to a large degree by the respective public “hype” regarding ICOs.

The role of advisors’ centrality in the success of Initial Coin Offerings

Initial Coin Offerings (ICOs) are unregulated offerings of digital tokens on the Internet, built on the blockchain technology, as to provide a means to collect finance for a project, disintermediating any external platform, payment agent or professional investor. ICO proponents are usually teams made up by entrepreneurs, professionals, technicians and managers, eventually assisted by an advisory committee.In this work, we analyse the determinants of the characteristics of the advisory board and using different centrality and connectedness measures from social network analysis we analyse the relationship with the ICO fundraising success.We find that larger and more experienced teams are more likely to appoint a committee of advisors and its presence is significantly correlated with the ICO success. Different facets of the ICO centrality in the advisors’ network are associated to different effects. We find a U-shaped relationship between the number of advisors’ connections, their capability to act as ‘bridges’ in the network and the ICO success; we also find that, in order to raise larger amount of money, it is important to hire advisors which are linked to ‘well-connected’ advisors in other ICOs and are more closely linked to all other nodes in the network.

Cyber Risks and Initial Coin Offerings: Evidence from the World

This paper examines the impact of cyber risks on ventures’ initial coin offerings (ICOs) results. We match novel data on national cyber-security with hand collected characteristics of 1,654 ICO projects and discover that cyber risks are negatively associated ICO success. We further find that institutional quality, such as the protection of investor rights and the function of the legal system, attenuates this relationship.

Factors of Success of Initial Coin Offering. Empirical Evidence from 2016–2019

Since 2013, Initial Coin Offerings (ICO) have allowed companies to attract financing with the help of cryptocurrencies. Statistics of ICO shows that the ICO market is increasing and demand for funds continues to grow with claims of over $ 15 billion raised in the first half of 2018. The increasing volumes of investment in ICO projects as an alternative method to venture capital or IPO are caused by, for example, the possibility of reselling the received tokens at a higher price after the launch of the project or obtaining the company’s services at lower prices. While the importance of the topic is growing, there is the absence of fundamental works emphasizing the determinants of an ICO’s success. The scientific novelty of the forthcoming research consists in the formation of the model evaluation of ICO success. Using econometric analysis based on data for 1392 projects, we show that the volatility of the main cryptocurrencies has a significant impact on the success of ICO. The constraints of the platform for Smart Contacts (ERC-20) and dependence on the Ethereum volatility overcome all other factors. Our data contributes to existing literature and shows the insignificance e of the sector of the project, almost all location region and fl of infl e of quality of the team. This result may be explained by the uncertainty of the investor about the project (weak signals), absence of the regulation and legal framework. This result is beneficial for owners of companies since it is an argument for decreasing costs for marketing.

FinTech Projects and Initial Coin Offerings: A Research Note

We explore the determinants of success of Initial Coin Offerings (ICO) defined as whether the ICO was successful in raising the funds. We look at financial and technical information disclosed by the ICO as well as the information disclosed by third parties about the ICO and the level of legal protection granted. We discover that even if both hard information (financial and technical) and soft information (social media and legal protection) matter, nevertheless a more relevant role is played by the technical information. Based on our analysis, we identify areas that need further investigation in the context of ICOs.

Success of Initial Coin Offering. The Empirical Evidence from 2016-2019

Since 2013 Initial Coin Offerings (ICO) have allowed companies to attract financing with the help of cryptocurrencies. In August 2017, the total capitalization of the crypto currency market exceeded $150bln. From the 1st quarter of 2015 to November 2017, the volume of funds raised amounted to $3,78bln. Statistics of ICO shows that demand continues to grow with claims of over $15bln raised in the first half of 2018. The first quarter of 2019 ended with $902 million total raised funds and $8.4 million average raised funds. The increasing number of projects financed by ICO (4954 projects during 5 years) as an alternative method to venture capital (VC) or initial coin offering (IPO) is caused by several reasons: the possibility of reselling the received tokens at a higher price after the launch of the project or earlier; the possibility of obtaining the company's services at lower prices; the increased popularity of crypto currencies (e.g. Bitcoin, Ethereum, etc.); the expectation of high profitability; the high speed of transactions (including the speed of attracting initial investments) and anonymity. However, due to difficulties in regulation, the ICO market attracts smaller investments on average (average investments in ICO projects equal to $19 million in comparison with the average size of IPO - $207,2 million) and there exists more chance for manipulation in the market, which leads to the fact that the results relevant to the IPO market cannot be applied directly to ICO. Due to the fact that blockchain technology and cryptocurrencies are new tools in finance, and the data for research has just begun to appear, there is a limited number of academic papers in this area of studies. Moreover, they are devoted mainly to the description of the mechanisms of the ICO, the advantages and risks of ICO, the review of existing ICO and crypto exchanges, legislation. The absence of fundamental works emphasizes the relevance and scientific novelty of the forthcoming research. The contribution to the existing literature is the identification of factors that affect the successful of ICO. Scientific novelty consists in the formation of the model evaluation of ICO success. Empirical results show that volatility of main cryptocurrencies has significant impact on the success of ICO. The constraints of the platform for Smart Contacts (ERC-20) and dependence on the Ethereum volatility overcome all other factors. Our data contributes with existence literature and shows the insignificance of sector of the project, almost all location region and fluctuation of influence of quality of team. This result may be explained by the uncertainty of the investor about the project (weak signals), absence of the regulation and legal framework. This result is beneficial for owners of companies since it is an argument for decreasing costs for marketing.