Venture Capital and the Performance of Blockchain Technology-Based Firms: Evidence from Initial Coin Offerings (ICOs)
45 Pages Posted: 30 Jul 2019
Date Written: July 26, 2019
Little is known about the role of venture capital (VC) in the financing of blockchain technology- based firms (BTBFs). We assess BTBF post-ICO performance in terms of growth, utilization, and profits and employ econometric methods to control for the endogeneity inherent in VC financing. Our results suggest that VC financing causes BTBFs to substantially outperform their peers. Specifically, we find that VCs are not able to pick better BTBFs to invest in (selection effect). Instead, they add value post-investment (treatment effect). Overall, we show that VCs are an important, value-increasing intermediary in the emerging blockchain sector.
Keywords: Venture Capital, Token Offering, Initial Coin Offering, Blockchain, Entrepreneurial Finance
JEL Classification: G24, M13, O30
Suggested Citation: Suggested Citation