Initial Coin Offerings   A Paradigm Shift in Funding Disruptive Innovation

Lipusch, Nikolaus

doi:10.2139/ssrn.3148181

Cited by 24 publications

(10 citation statements)

References 27 publications

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“…An overview is provided in Table 1. Other excellent comparisons of ICOs and conventional financing methods are presented in Lipausch [41] and Blaseg [19], on which this section draws to some extent.…”

Section: A Comparison Of Icos To Conventional Financing Methodsmentioning

confidence: 99%

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Initial Coin Offerings

Momtaz

2020

PLoS ONE

106

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This paper examines the market for initial coin offerings (ICOs). ICOs are smart contracts based on blockchain technology that are designed for entrepreneurs to raise external finance by issuing tokens without an intermediary. Unlike existing mechanisms for earlystage finance, tokens potentially provide investors with rapid opportunities thanks to liquid trading platforms. The marketability of tokens offers novel insights into entrepreneurial finance, which I explore in this paper. First, I document that investors earn on average 8.2% on the first day of trading. However, about 40% of all ICOs destroy investor value on the first day of trading. Second, I explore the determinants of market outcomes and find that management quality and the ICO profile are positively correlated with the funding amount and returns, whereas highly visionary projects have a negative effect. Among the 21% of all tokens that get delisted from a major exchange platform, highly visionary projects are more likely to fail, which investors anticipate. Third, I explore the sensitivity of the ICO market to adverse industry events such as China's ban of ICOs, the hack of leading ledgers, and the marketing ban on FaceBook. I find that the ICO market is highly susceptible to such environmental shocks, resulting in substantial welfare losses for investors.

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Section: A Comparison Of Icos To Conventional Financing Methodsmentioning

confidence: 99%

“…Venture capitalists and IPO investors are more likely to be driven by financial motives, while ICO and crowdfunding investors are often equally driven by financial motives and non-financial motives (altruism, product interests, feedback provision, etc.) (see [41]). Deal characteristics.…”

Section: Plos Onementioning

confidence: 96%

Initial Coin Offerings

Momtaz

2020

PLoS ONE

106

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“…Third, the most recent entrant to the early-stage risk capital market, seen by some as a genuinely disruptive innovation that will fundamentally transform the market (Lipusch 2018), is the blockchain-based Initial Coin Offering (ICO). Although there is still some definitional opaqueness, an ICO can be defined as an open call "for funding promoted by organizations, companies, and entrepreneurs to raise money through cryptocurrencies, in exchange for a 'token' that can be sold on the Internet or used in the future to obtain products or services and, at times, profits" (Adhami, Giudici, and Martinazzi 2018, 1).…”

Section: Market Evolution -New Playersmentioning

confidence: 99%

“…This definition is very similar in practice to that of a crowdfunding campaign , where fiat currency is collected (Belleflamme, Lambert, and Schwienbacher 2014). Table 1 summarises the key features of established and new actors in the entrepreneurial finance market. ICO funding has grown significantly: 2007 data suggest ICOs worldwide raised $5.3bn, compared with US and European VC of $71.8bn and $4.3bn and accumulated crowdfunding investment of $3.4bn (Kickstarter) and $483m (Crowdcube) (Adhami, Giudici, and Martinazzi 2018); ICO funding had exceeded early-stage VC investment by June 2017 (Lipusch 2018); and in 2017 equity investors deployed $1bn in 215 deals in blockchain start-ups compared to ICO fundraising of over $5bn across almost 800 deals (Li and Mann 2018). In terms of ICO activity, Figure 6, based on ICO WatchList 2018data, shows the top 15 countries in terms of the cumulative number of ICOs launched, plus those countries accounting for more than 1% of total global ICO fund-raising.…”

Section: Market Evolution -New Playersmentioning

confidence: 99%

Venture Capital 20 years on: reflections on the evolution of a field

Harrison

Mason

2019

Venture Capital

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This paper reviews the circumstances surrounding the launch of Venture Capital: An International Journal of Entrepreneurial Finance in 1999. It highlights a number of significant changes in the structure of the entrepreneurial finance market over the past 20 years, notably the decline of "classic" venture capital, the effective closure of the small-cap IPO market, the scale-up problem and the emergence of a second equity gap, the geographical dispersion of venture capital and the institutionalisation of the business angel market. A number of new players in the marketcoinvestment schemes, equity crowdfunding platforms and blockchain technology-based Initial Coin Offeringsare discussed and the challenges and opportunities they pose for investors, entrepreneurs, policy makers, regulators and academic researchers are assessed. Against this background, a number of key features of the evolution of the content and focus of the Journal are discussed. The paper finishes with a summary of the papers included in this Special Issue.

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“…However, China started banning all ICOs in 2017 because investors were exposed to high risks, and the ICOs promoted scam and fraudulent investment. Generally, the year 2017 was a landmark year for ICOs because they became popular and the majority of funds were raised and collected using this technique 64…”

Section: Fig 3: Coinschedulecom (Ico By Category In Year 2018)mentioning

confidence: 99%

Challenges Blockchain Technology and Initial Coin Offering ICO in Healthcare from Legal Perspectives

Hussain

2019

IJEAT

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This paper reviews the empirical literature on Initial Coin Offering (ICO), blockchain technology and impact for healthcare based on legal perspectives. The rise of blockchain technology has given impact especially on financial sector and business, there are very limited research been done about the implications of this technology in healthcare sector. Based from the literature it shows that it is still scarce about blockchain and initial coin offerings in healthcare industry. The scope of this article is twofold which is i) to understand the impact of blockchain technology and initial coin offering in healthcare industry; and 2) to understand the legal challenges especially in initial coin offerings. The revolution of blockchain technology will provide more positive impact in healthcare sector and can be used as new strategic directions for future research.

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Initial Coin Offerings A Paradigm Shift in Funding Disruptive Innovation

Cited by 24 publications

References 27 publications

Initial Coin Offerings

Initial Coin Offerings

Venture Capital 20 years on: reflections on the evolution of a field

Challenges Blockchain Technology and Initial Coin Offering ICO in Healthcare from Legal Perspectives

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