Venture Capital and the Performance of Blockchain Technology-Based Firms: Evidence from Initial Coin Offerings (ICOs)

45 Pages Posted: 30 Jul 2019

See all articles by Christian Fisch

Christian Fisch

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Department of Applied Economics; Erasmus Research Institute of Management (ERIM)

Paul P. Momtaz

University of California, Los Angeles (UCLA) - Anderson School of Management

Date Written: July 26, 2019

Abstract

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

Fisch, Christian and Momtaz, Paul P., Venture Capital and the Performance of Blockchain Technology-Based Firms: Evidence from Initial Coin Offerings (ICOs) (July 26, 2019). Available at SSRN: https://ssrn.com/abstract=3427025 or http://dx.doi.org/10.2139/ssrn.3427025

Christian Fisch (Contact Author)

University of Trier - Faculty of Management ( email )

Universitätring 15
Trier, 54296
Germany
0049 651 2013033 (Phone)

HOME PAGE: http://www.unternehmensfuehrung.uni-trier.de

Erasmus University Rotterdam (EUR) - Department of Applied Economics ( email )

Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Paul P. Momtaz

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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