Collecting money through blockchain technologies: first insights on the determinants of the return on Initial Coin Offerings

ABSTRACT

Initial Coin Offerings (ICOs), i.e. the initial offer of a crypto-token, represent an increasingly popular method to raise money. However, the determinants of ICOs’ returns for investors are still overlooked. Following this cue, the empirical outcomes of our study based on crypto-tokens issued between 2017 and 2018 evidence the main determinants of ICOs’ returns: first, crypto-tokens returns are positively associated to Ether’s returns; second, ICO price is negatively associated to later price increases; third, crypto-tokens returns are lower when they are offered in presale; finally, the more a crypto-token price increases between the ICO and the listing-date on the secondary-market and the more its price rises in the following month. In so doing, we contribute to a better understanding of the ICO phenomenon and highlight which aspects may benefit fund raising, which are relevant for the establishment of new startups and more broadly for the economic development of a country.

KEYWORDS:

• Initial Coin Offering
• blockchain
• crypto-token
• token‌
• economic development
• startup
• crowd‌

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by Ermenegildo Zegna [Grant Numbers: EZ Founder’s Scholarship 2017-2018, 2018-2019, and 2019-2020].

Notes on contributors

Francesco Cappa

Francesco Cappa is currently a Postdoctoral Research Fellow with the Department of Business and Management of LUISS University, Rome (Italy). He has been a visiting researcher with the Tandon School of Engineering, New York University, New York (USA) and Seidenberg School of Computer Science, Pace University, New York (USA). He is the author or coauthor of papers that have appeared in Research Policy, Small Business Economics, IEEE Transactions on Engineering Management, Strategic Organization, Business Horizons, Journal of Environmental Management, Computers in Human Behavior and Sustainability among others. His main research interests are in the areas of innovation and sustainability.

Michele Pinelli

Michele Pinelli is currently an Assistant Professor with the Faculty of Economics and Management of the Free University of Bozen-Bolzano (Italy) and research fellow at the Centre for Family Business Management of the same university. He is the author or coauthor of works published in Research Policy, Small Business Economics, IEEE Transactions on Engineering Management, Strategic Organization, Journal of Consumer Marketing and Sustainable Development. His current research interests include conflicts of interests between shareholders and managers, stock market reactions to event announcements, entrepreneurial fundraising and entrepreneurial effectiveness.