Which investors’ characteristics are beneficial for initial coin offerings? Evidence from blockchain technology-based firms

Abstract

Initial coin offerings have recently become one of the most important funding resources for ventures in the blockchain area. However, often ventures do not rely solely on initial coin offerings as funding source but receive also investments from more established investors prior or during their initial coin offering. In particular, blockchain related ventures have drawn the attention of (corporate) venture capitalists but only less is known on the interplay of these different funding sources and their influence on initial coin offerings as well as on ventures’ further development. Based on the signaling theory as well as the resource-based-view our empirical study find that venture capital investors as well as corporate venture capital investors have a significantly positive effect on initial coin offerings. Further, we find that the reputation, the time of treatment as well as the specialization of investors have a positive influence on the initial coin offering. Finally, our results indicate that the positive effect of venture capital investors as well as the specialization of an investor continues to influence blockchain based ventures’ success in the mid-term.

The New Tokenomics of Crowdfunding

“…In the same vein, Aggarwal, Hanley and Zhao (2019) and Yen, Wang and Chen (2021) examine external quality ratings, while Belitski and Boreiko (2022) interpret additional venture characteristics as quality signals. 6 For instance, Faust et al (2022) and Mansouri and Momtaz (2022) examine whitepapers using machine learning models, while Samieifar and Baur (2021), Florysiak and Schandlbauer (2022), Kasatkin (2022) and Thewissen et al (2022Thewissen et al ( , 2023) also focus on whitepaper characteristics; Roosenboom, van der Kolk and de Jong (2020) examine bonus schemes and offering duration; Amsden and Schweizer (2018) consider the ETH/USD traded price and volatility; Albrecht, Lutz and Neumann (2020) focus on the initial offering price and online search trends; Blaseg (2018), Momtaz (2020), Campino, Brochado andRosa (2021), Guzman, Pinto-Gutierrez and Trujillo (2021) Wei (2021), andXu et al (2021) focus on venture team characteristics; venture CEO characteristics are examined by Momtaz (2021aMomtaz ( , 2021c and Colombo et al (2022);Fisch, Meoli and Vismara (2022) examine the choice of token offerings versus traditional financing alternatives; topics such as venture capital investor participation, venture domicile and fraudulent behaviour are examined by Giudici and Adhami (2019), An et al (2021), Hackober and Bock (2021) (similar to the topics examined for traditional venture capital finance by Capizzi, Croce andTenca, 2022 andLevasseur, Johan andEckhardt, 2022), Shrestha et al (2021), Hornuf, Kück andSchwienbacher (2022), Swartz (2022), and…”

The New Tokenomics of Crowdfunding

“…In the same vein, Aggarwal, Hanley and Zhao (2019) and Yen, Wang and Chen (2021) examine external quality ratings, while Belitski and Boreiko (2022) interpret additional venture characteristics as quality signals. 6 For instance, Faust et al (2022) and Mansouri and Momtaz (2022) examine whitepapers using machine learning models, while Samieifar andBaur (2021), Florysiak andSchandlbauer (2022), Kasatkin (2022) and Thewissen et al (2022Thewissen et al ( , 2023) also focus on whitepaper characteristics; Roosenboom, van der Kolk and de Jong (2020) examine bonus schemes and offering duration; Amsden and Schweizer (2018) consider the ETH/USD traded price and volatility; Albrecht, Lutz and Neumann (2020) focus on the initial offering price and online search trends; Blaseg (2018), Momtaz (2020), Campino, Brochado and Rosa (2021), Guzman, Pinto-Gutierrez and Trujillo (2021) Huang, Vismara and Wei (2021), and Xu et al (2021) focus on venture team characteristics; venture CEO characteristics are examined by Momtaz (2021aMomtaz ( , 2021c and Colombo et al (2022);Fisch, Meoli and Vismara (2022) examine the choice of token offerings versus traditional financing alternatives; topics such as venture capital investor participation, venture domicile and fraudulent behaviour are examined by Giudici and Adhami (2019), An et al (2021), Hackober and Bock (2021) (similar to the topics examined for traditional venture capital finance by Capizzi, Croce andTenca, 2022 andLevasseur, Johan andEckhardt, 2022), Shrestha et al (2021), Hornuf, Kück and…”

Historical Determinants of Fintech Development: Evidence from Initial Coin Offerings

“…Our research is closely related to, but different from, a recent literature that examines the determinants of successful funding raising through ICOs. For example, Hackober and Bock (2021), Ahmad, et al (2020), An, et al (2019) find that venture capital investments, expert ratings, insider 3 retention, and founding team's characteristics all contribute to the success of an ICO. The findings of these studies provide a clear message that successful fund raising through ICO critically depends on the quality of the project which manifests itself through different types of signals (e.g., teams characteristics, insider retention, analyst rating, etc.).…”