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Attracting Investors in Initial Coin Offerings: The Relevance of Specific Technological Capabilities for Fundraising Success

Author

Listed:
  • Stephan Philippi
  • Monika C. Schuhmacher
  • Nicolai Bastian

Abstract

Drawing on signaling theory, we argue that signal vehicles for technological capabilities determine the fundraising success of initial coin offerings (ICOs). We analyze data from 357 ICOs between 2014 and 2020 using linear regressions. In addition to the effects of signal vehicles for technological capabilities, we account for campaign and venture characteristics. Our results reveal that ICO start-ups raise funds more successfully when they publish their source code. By following the logic of diffusion theory, we also find that ICO investors have characteristics similar to those of adopters of innovations. In this regard, we show that the effectiveness of signal vehicles for technological capabilities changes over time. Specifically, the early majority of adopters prefers a public source code, while the late majority prefers an own blockchain. Furthermore, patents do not serve as signal vehicle for technological capabilities. Consequently, we provide guidance for start-ups on how to conduct successful ICO fundraising.

Suggested Citation

  • Stephan Philippi & Monika C. Schuhmacher & Nicolai Bastian, 2021. "Attracting Investors in Initial Coin Offerings: The Relevance of Specific Technological Capabilities for Fundraising Success," Review of Corporate Finance, now publishers, vol. 1(3-4), pages 455-485, July.
    • Handle: RePEc:now:jnlrcf:114.00000010
    DOI: 10.1561/114.00000010
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    Citations

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    Cited by:

    1. Ploypailin Kijkasiwat & Hamza Almustafa & Pongsutti Phuensane, 2023. "Initial coin offerings for business: a systematic literature review and bibliometric analysis," SN Business & Economics, Springer, vol. 3(1), pages 1-31, January.
    2. Bao Doan & Huy Pham & Binh Nguyen Thanh, 2022. "Price discovery in the cryptocurrency market: evidence from institutional activity," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(1), pages 111-131, March.
    3. Douglas Cumming & Sofia Johan & Zaheer Khan & Martin Meyer, 2023. "E-Commerce Policy and International Business," Management International Review, Springer, vol. 63(1), pages 3-25, February.
    4. Peng‐Fei Dai & John W. Goodell & Luu Duc Toan Huynh & Zhifeng Liu & Shaen Corbet, 2023. "Understanding the transmission of crash risk between cryptocurrency and equity markets," The Financial Review, Eastern Finance Association, vol. 58(3), pages 539-573, August.
    5. Jörn H. Block & Christian Fisch & Walter Diegel, 2024. "Schumpeterian entrepreneurial digital identity and funding from venture capital firms," The Journal of Technology Transfer, Springer, vol. 49(1), pages 119-157, February.
    6. Maurer, Joshua D. & Creek, Steven A. & Allison, Thomas H. & Bendickson, Joshua S. & Sahaym, Arvin, 2023. "Affiliation rhetoric and digital orientation in crowdfunding appeals," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    7. Binh Nguyen Thanh & Thai Nguyen Vu Hong & Huy Pham & Thanh Nguyen Cong & Thu Pham Thi Anh, 2023. "Are the stabilities of stablecoins connected?," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(3), pages 515-525, September.
    8. Miglo, Anton, 2022. "Theories of financing for entrepreneurial firms: a review," MPRA Paper 115835, University Library of Munich, Germany.

    More about this item

    Keywords

    Initial coin offering; entrepreneurial finance; technological capabilities; signaling theory;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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