A New Era of Entrepreneurial Finance? Venture Tokenization and Public Markets for Startups

Johannes Fuchs and Paul P. Momtaz

No 11760, CESifo Working Paper Series from CESifo

Abstract: After initial coin offerings (ICOs), decentralized digital platforms (DDPs) decide whether to go public or remain private. We explore the implications of the public-versus-private decision for the growth and decentralization of DDPs. Employing a difference-in-differences framework, we find that public DDPs scale faster post-listing relative to matched private DDPs. An important driver behind public DDPs’ superior growth is a spillover effect of financial speculation on fundamental platform activity, especially when DDPs are undervalued, hastening network effects. The going-public decision also facilitates DDP decentralization, although this stems mostly from the left tail of the token ownership distribution, while blockholders largely remain in control. Exploring the trade-off between going public through token exchange listings and remaining private with the help of institutional investors, we find that crypto fund-endorsed token listings yield more platform growth than unendorsed listings, while crypto fund backings without listings create the least value. Overall, our study suggests that early-stage startups may economically benefit from tokenization and creating liquid markets for venture tokens.

Keywords: entrepreneurial finance; decentralized platforms; tokenization; blockchain technology (search for similar items in EconPapers)
JEL-codes: G24 G32 K22 L26 (search for similar items in EconPapers)
Date: 2025
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