Does Blockchain Technology Democratize Entrepreneurial Finance? An Empirical Comparison of ICOs, Venture Capital, and REITs

38 Pages Posted: 6 Nov 2020

See all articles by Christian Fisch

Christian Fisch

University of Luxembourg - Interdisciplinary Centre for Security, Reliability and Trust (SnT)

Michele Meoli

University of Bergamo

Silvio Vismara

University of Bergamo

Date Written: September 16, 2020

Abstract

Initial coin offerings (ICOs) are one of the major innovations that characterize the digital revolution of financial markets. Among the expectations created by the digital revolution is the democratization of entrepreneurial finance, defined in terms of the creation of more equality regarding the access to financial resources by categories known to be underrepresented among potential entrepreneurs. Following this line of research, we investigate, through two complementary empirical studies, whether gender, ethnicity, and geography affect the choice of ICOs vs. traditional financing alternatives. Additionally, we assess whether these characteristics in-crease the amount of money an entrepreneur can raise. In Study I, we compare 390 ICO ventures to a sample of 1,078 VC-backed block-chain ventures, identifying a negative correlation between the choice of an ICO (vs. VC-backing) and a location in an urban area. In Study II, we compare 160 ICO ventures to 163 real estate investment trusts (REITs), reaffirming the results of Study I. The findings show significant participation and likelihood of successful campaigns for ethnical minorities in ICOs, with the latter also being able to collect, ceteris pari-bus, larger amounts of funding. In contrast, female entrepreneurs do not have higher chances to participate nor raise funds in ICOs.

Keywords: Digital Finance, Initial Coin Offerings, Entrepreneurial Finance, ICOs, Democratization, Gender, Ethnical Minorities, Remote Entrepreneurship

JEL Classification: g30

Suggested Citation

Fisch, Christian and Meoli, Michele and Vismara, Silvio, Does Blockchain Technology Democratize Entrepreneurial Finance? An Empirical Comparison of ICOs, Venture Capital, and REITs (September 16, 2020). Available at SSRN: https://ssrn.com/abstract=3693802 or http://dx.doi.org/10.2139/ssrn.3693802

Christian Fisch

University of Luxembourg - Interdisciplinary Centre for Security, Reliability and Trust (SnT) ( email )

JFK Building
29, Avenue J.F Kennedy
Luxembourg, L-1885
Luxembourg

Michele Meoli

University of Bergamo ( email )

Via Marconi 5
24044 Dalmine, Bergamo
Italy
+390352052026 (Phone)
+390352052077 (Fax)

Silvio Vismara (Contact Author)

University of Bergamo ( email )

Via dei Caniana
2
Bergamo, 24127
Italy
24127 (Fax)

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