ICOs, IEOs and STOs: Token Sales as Innovative Formulas for Financing Start-Ups

Noelia Romero-Castro (), Ada M. Pérez-Pico () and Klaus Ulrich ()
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Noelia Romero-Castro: Santiago de Compostela University
Ada M. Pérez-Pico: Santiago de Compostela University
Klaus Ulrich: ESIC Business & Marketing School

A chapter in Financing Startups, 2022, pp 117-147 from Springer

Abstract: Abstract Distributed ledger technologies (DLTs) and blockchain have enabled the creation of a new form of digital assets (tokens) that can be sold to investors through public token offerings to raise capital in a decentralized and disintermediated fashion, with important implications in terms of cost and time efficiencies. Initial coin offerings (ICOs) were the first development of this innovative fundraising method, and they stood out for their potential to hasten network effects to support the development of blockchain-based projects. However, the scant and ambiguous regulation of ICOs has led to other forms of token offerings more geared towards ensuring investor protection, such as initial exchange offerings (IEOs) and security token offerings (STOs). The differences and similarities between these three types of token offerings are presented and compared to other forms of financing (venture capital (VC), crowdfunding and initial public offerings (IPOs)). A complete overview of the process of launching a token offering is then presented, describing both the ecosystem of agents involved in the process and its main stages.

Date: 2022
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DOI: 10.1007/978-3-030-94058-4_8

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