Venture capital affiliation in decentralized finance: evidence from ICOs in blockchain ecosystem

Francisca Duarte Camelo () and Fábio Dias Duarte ()
Additional contact information
Francisca Duarte Camelo: University of Porto
Fábio Dias Duarte: University of Porto

Financial Markets and Portfolio Management, 2025, vol. 39, issue 2, No 3, 195-223

Abstract: Abstract Initial coin offerings (ICOs) have emerged as a new form of digital and decentralized finance. They have the potential to disrupt conventional finance sources and expand capital-raising alternatives. However, their decentralized nature, lack of regulation, and market complexity, along with fraud events, have led to a crisis of trust. This crisis jeopardizes firms' fundraising success. This study examines the role of specialized venture capitalists (VCs) in overcoming transparency issues and restoring trust in the market and ICO issuers. Based on data from 191 ICOs, our results show that VC-backed firms have higher ICO success. This success is more pronounced for firms affiliated with VCs specializing in blockchain technologies, especially if ICO issuers are opaque and riskier. Specialist VC affiliation leads investors to buy more tokens. This effect increases with additional affiliations with other specialized VCs. For early-stage firms with a product/service, generalist VC affiliation also plays a certification role, enhancing the probability of ICO success.

Keywords: Initial coin offerings; Early-stage firms; Venture capitalists; Specialization; Certification hypothesis (search for similar items in EconPapers)
JEL-codes: G20 G24 O33 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11408-024-00465-2 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:fmktpm:v:39:y:2025:i:2:d:10.1007_s11408-024-00465-2

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/11408/PS2

DOI: 10.1007/s11408-024-00465-2

Access Statistics for this article

Financial Markets and Portfolio Management is currently edited by Manuel Ammann

More articles in Financial Markets and Portfolio Management from Springer, Swiss Society for Financial Market Research Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().