Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/288760 
Year of Publication: 
2020
Citation: 
[Journal:] Small Business Economics [ISSN:] 1573-0913 [Volume:] 57 [Issue:] 2 [Publisher:] Springer US [Place:] New York, NY [Year:] 2020 [Pages:] 1027-1052
Publisher: 
Springer US, New York, NY
Abstract: 
Initial coin offerings (ICOs) are a novel form of funding that has driven billions of dollars into the blockchain ecosystem, potentially challenging traditional funding vehicles such as business angel or venture capital investments. However, little is known of entrepreneurs’ rationales for leveraging this emerging form of financing. This article investigates the economic and behavioral factors that motivate entrepreneurs to fund their startup operations with ICOs. By conducting in-depth interviews with C-level managers or founders of ICO-funded startups, our analysis reveals four dimensions that have an impact on the decision: (1) funding, (2) community building, (3) tokenomics, and (4) personal and ideological drivers. Our findings suggest that the entrepreneur’s social identity in conjunction with the enabling mechanisms of the blockchain technology shape entrepreneurial pursuits and funding choice. We contribute to the literature on entrepreneurial finance by increasing understanding of ICOs and to the literature on entrepreneurial decision making by providing qualitative insights into the influence of founder identity on key decisions in startups such as financing.
Subjects: 
Initial coin offerings
Entrepreneurial finance
Entrepreneurial decision making
Social identity
Digital entrepreneurship
Blockchain
JEL: 
M13
M15
G23
G32
L17
L26
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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