It’s not only what you say but “how” you say it: linguistic styles and ICOs success

Digital technologies have created new alternative sources of entrepreneurial finance that create significant opportunities for start-ups and entrepreneurs. Among them, Initial Coin Offerings (ICOs) have attracted significant attention from the start-up community and from investors. Despite all the hype around ICOs and the growing number of new token offerings being launched on a daily basis, little is known about the characteristics of successful ICOs. This study aims to fill this gap in the literature by exploring whether and how the linguistic styles adopted in the white paper affects the success of an ICO as measured by the actual amount raised by the offering. Our results are based on a primary dataset of 131 ICOs completed between June 2017 and October 2018. Our results suggest that the use of precise language is positively associated with the amount funded while the use of a concrete language and more numerical terms is negatively associated with the amount funded. This study contributes to the growing literature on ICOs by providing novel insights into the role of the communication strategy adopted by token issuers.info:eu-repo/semantics/acceptedVersio

Initial Coin Offering (ICOs) : determinants of successful Initial Coin Offering (ICOs)

O objetivo desta dissertação é identificar as determinantes que influenciam o sucesso de uma Initial Coin Offering (ICO). Especificamente, este trabalho investiga diferentes abordagens usadas para lançar com sucesso uma Initial Coin Offering (ICO) e identifica os seus determinantes. Uma amostra de 206 white papers de Initial Coin Offering foi examinada para detetar se as divulgações de algumas características específicas aumentam a probabilidade das ICOs serem bem-sucedidas. O conteúdo do white paper, a classificação do site icobench e a plataforma Ethereum aumentaram a qualidade da informação e a probabilidade de sucesso das ICOs. Resultados semelhantes foram encontrados quando os ICOs são Smart contracts. Além disso, descobriu-se que o local onde as ICOs são lançadas determina o montante de dinheiro arrecadado, bem como o lançamento de um projeto ICOs em um país paraíso fiscal afeta positivamente o sucesso da ICO.The aim of this dissertation is to identify the determinants that lead Initial Coin Offering (ICO) to success. Specifically, this work investigates different approaches used to launch successful Initial Coin Offering (ICO) and identify its determinants. A sample of 206 Initial Coin Offerings white papers has been examined to detect if the disclosure of some specific characteristics increases the probability of successful ICOs. Both length of the white papers, rating of Icobench website and Ethereum platform have been found to increase the quality of information and probability of successful ICOs. Similar results have been found when ICOs are smart contracts. Moreover, the location where ICOs are launched has been found to determine the amount of money raised, and the launch of ICOs project in a tax haven country positively affects ICO success

The effect of lockup and persuasion on online investment decisions: an experimental study in ICOs

Many firms use social media (SM) to solicit online investments. In this study, we examine the interaction between SM attributes and online-investment attributes to determine how this interaction shapes users’ investment decisions. Specifically, we investigate initial coin offerings (ICOs) as an application domain of distributed ledger technology for peer-to-peer investment. We use signaling theory to develop a context-specific explanation for how the interplay of persuasion signals found in SM and technology-enforced lockups shapes individuals’ ICO investment decisions. To evaluate this interplay, we conducted a 2 × 2 factorial experiment with 473 participants. The results show that when an investment does not require a technology-enforced lockup, persuasion signals encourage investments in ICOs; however, when an investment requires a technology-enforced lockup, persuasion signals do not affect investments in ICOs. Furthermore, our analyses suggest that combining a technology-enforced lockup and persuasion signals reduces the ICO’s plausibility. This is the first study to investigate how the willingness to invest in ICOs is influenced by the relationship between technology-enforced lockups and persuasion signals. The findings have practical implications for individuals attempting to make sound decisions on ICO investments, policymakers regulating online investments, and firms seeking to attract investors

The evolvement and future directions of equity crowdfunding: an explorative study

Equity crowdfunding has matured to a viable option for non-technology and technology companies to raise funding in their early and later stages in the past ten years. Venture capital (VC) companies and business angels have been increasingly involved in equity crowdfunding rounds. In recent years, a new forms of crowdfunding, initial coin offerings (ICOs) and security token offerings (STOs) have emerged. To understand more of the emerging funding industries, this study seeks to shed light on how the maturing equity crowdfunding industry will evolve in the future, how it will affect on the operation models and business models of venture capitalists, how the blockchain technology will affect on equity crowdfunding and what are the advantages and disadvantages of ICOs and STOs compared to a traditional equity crowdfunding. The study uses explorative research method based on semi- structured qualitative interviews with entrepreneurs, who have raised funding from venture capitalists, organized an initial coin offering or an equity crowdfunding round and interviews with venture capitalists, whose portfolio companies have raised funding through equity crowdfunding. Based on the interviews several key findings can be concluded on why companies choose to raise funding by organizing an equity crowdfunding round, why venture capital backed companies raise follow-on funding through equity crowdfunding, how venture capitalists see equity crowdfunding affecting to their business models and how equity crowdfunding offers an alternative way to raise funding for companies, that venture capital companies do not fund. Initial coin offerings and security token offerings are a new form crowdfunding, which emerged in 2013. This thesis will explore the advantages and disadvantages of ICOs and STOs compared to traditional equity crowdfunding. One of the central findings of this study is that equity crowdfunding, initial coin offerings and security token offerings can be used to finance different type of companies and projects that are not suitable for venture capitalists, because venture capitalist have tight criteria’s regarding the industry, growth and scalability of the company. Venture capitalists do not see equity crowdfunding as a threat to their businesses, but rather as an ancillary for venture capital and a tool for a venture capitalist to raise follow-on funding for their portfolio companies. Another key contribution of this research is that companies who organize ICOs and STOs have applied the token into to core of their strategy by using a token as a payment method, using tokens to pay dividends, buying back the issued tokens, rewarding employees by giving them tokens and use tokens to encourage the community to act in a way that is beneficial for the company.Osakepohjainen joukkorahoitus on kehittynyt varteenotettavaksi rahoitusvaihtoehdoksi teknologia- ja muille yrityksille viimeisen kymmenen vuoden aikana. Venture capital (VC) yritykset ja businessenkelit ovat olleet aktiivisesti yhä enemmän mukana osakepohjaisissa joukkorahoituskierroksissa. Viime vuosina on ilmestynyt uusi joukkorahoituksen malli, kolikkoanti (initial coin offering, ICO) ja digitaalisten arvopapereiden liikkeellelasku (security token offering, STO). Ymmärtääksemme enemmän näistä verrattain uusista rahoituksen muodoista, tämä tutkielma pyrkii tuomaan selvyyttä miten osakepohjainen joukkorahoitus -toimiala tulee kehittymään tulevaisuudessa, miten se tulee vaikuttamaan venture capital -yritysten liiketoimintamalleihin, miten lohkoketjuteknologia vaikuttaa osakepohjaiseen joukkorahoitukseen ja mitkä ovat ICO- antien ja STO-antien edut ja haittapuolet verrattuna tavalliseen osakepohjaiseen joukkorahoitukseen. Tässä tutkielmassa käytetään eksploratiivistä tutkimusmenetelmää ja haastattelut on tehty puolistrukturoituina haastatteluina yrittäjien kanssa, jotka ovat nostaneet rahoitusta venture capital sijoittajilta, järjestämällä osakepohjaisen joukkorahoituskierroksen tai ICO-annin sekä haastatteluihin venture capital -sijoittajien kanssa, joiden portfolioyhtiöt ovat nostaneet rahoitusta osakepohjaisella joukkorahoituksella. Haastatteluiden perusteella voidaan tehdä monia keskeisiä löydöksiä, siitä miksi yritykset valitsevat osakepohjaisen joukkorahoituksen rahoitusmuodokseen, miksi venture capital rahastojen rahoittamat yritykset nostavat jatkorahoitusta osakepohjaisella joukkorahoituksella, miten venture capital -sijoittajat näkevät osakepohjaisen joukkorahoituksen vaikuttavan heidän liiketoimintamalleihinsa ja miten osakepohjainen joukkorahoitus tarjoaa vaihtoehtoisen tavan nostaa rahoitusta yhtiöille, joita venture capital -rahastot eivät tavallisesti rahoita. ICO-anti ja STO- anti ovat uusi joukkorahoituksen muoto, joka ilmestyi 2013. Tämä tutkielma tarkastelee ICO-antien ja STO-antien etuja ja haittapuolia verrattuna tavalliseen osakepohjaiseen joukkorahoitukseen. Yksi tämän tutkielman keskeisistä havannoista on, että osakepohjaista joukkorahoitusta, ICO- anteja ja STO-anteja voidaan käyttää erityyppisten yhtiöiden rahoitukseen ja projekteihin, jotka eivät ole venture capital yhtiöille sopivia sijoituskohteita, johtuen venture capital yhtiöiden tiukoista sijoituskriteereistä liittyen yrityksen toimialaan, kasvuun ja yhtiön skaalautuvuuteen. Venture capital sijoittajat eivät näe osakepohjaista joukkorahoitusta uhkana heidän toiminalleen, vaan pikemminkin venture capital -rahoitusta täydentävänä rahoitusmuotona ja työkaluna venture capital -rahastoille, jonka avulla voidaan nostaa jatkorahoitusta heidän portfolioyhtiöilleen. Toinen tämän tutkielman keskeinen havinto, on, että yritykset, jotka järjestävät ICO-annin tai STO-annin ovat sisällyttäneet tokenin yrityksen strategian ytimeen, käyttämällä tokenia maksutapana, maksaakseen osinkoja, ostamalla takaisin tokeneita, palkitsemalla työntekijöitään tokeneilla sekä kannustamalla yhteisöä toimimaan tavalla, joka on hyödyllinen yritykselle

Choice between IEO and ICO: speed vs. liquidity vs. risk

This paper analyzes a financing problem for an innovative firm that is considering launching a web-based platform. The model developed in the paper is the first one that analyzes an entrepreneur’s choice between initial exchange offering (IEO) and initial coin offering (ICO). Compared to ICO, under IEO the firm is subject to screening by an exchange that reduces the risk of investment in tokens; also the firm receives access to a larger set of potential investors; finally tokens become listed on an exchange faster. The paper argues that IEO is a better option for the firm if: (1) the investment size is relatively large; (2) the extent of moral hazard problems faced by the firm is relatively large; (3) the degree of investors’ impatience is relatively small. Furthermore, a non-linear relationship between firm quality and its financing choice is found. Most of these predictions are new and have not been tested so far

What the History of Linux Says About the Future of Cryptocurrencies

Since Bitcoin’s meteoric rise, hundreds of cryptocurrencies that people now publicly trade have emerged. As such, the question naturally arises: how have cryptocurrencies evolved over time? Drawing on the theory of polycentric information commons and cryptocurrencies’ historical similarities with another popular information commons (namely, Linux), we make predictions regarding what cryptocurrencies may look like in the future. Specifically, we focus on four important historical similarities: 1) support from online hacker communities, 2) pursuit of freedom, 3) criticism about features and use, and 4) proliferation of forks. We then predict that: 1) cryptocurrencies will become more pragmatic rather than ideological, 2) cryptocurrencies will become more diverse in terms of not only the underlying technology but also the intended audience, and 3) the core technology behind cryptocurrencies, called blockchain, will be successfully used beyond cryptocurrencies

The Effect of Information Asymmetry on Investment Behavior in Cryptocurrency Market

With the increase in the attention to cryptocurrency, studies on the factors affecting the price fluctuation of cryptocurrency have been actively conducted. Prior researches suggested that policy announcements (i.e., public information) related to cryptocurrency have been found to affect the price volatility in the market in particular. Privileged information, which is hard to be observable unlike public information published by the government or corporations, is hardly homogenously distributed to individual investors. However, it inevitably affects the price in any market. Therefore, this study aims to identify the information asymmetry, which is mainly formed by privileged information, in the cryptocurrency market. Moreover, this study examines whether investment sentiment, which mainly influences transaction behaviors of uninformed traders, has a significant effect on the cryptocurrency market as well. The results contribute to the understanding of the cryptocurrency market in a basis of the existing market theories