Factors Affecting Success of Initial Coin Offerings (ICOs)

Abstract

Initial Coin Offering (ICO) has been popular amongst entrepreneurs interested in the field of blockchain as a prime way of collecting investment for their ventures. Hundreds of ICOs are launched every year based on different blockchain technologies trying to contribute several different ideas in the field of blockchain industry however, only few of them are able to collect minimum investment required, often termed as Softcap, for starting their project while most of them fail. Likewise, among the successful ones very few are able to reach their maximum target, often termed as Hardcap. The success of an ICO is affected by various factors. The objective of this thesis is to test existence of relationship between ratings provided by experts based on team, product, vision and social activities of ICO and the success of the ICO, considering expert ratings to be one of the success factors. For the purpose of thesis, the ratings provided by experts on ICOs based on ICO characteristics and social activities (independent variables) were collected from different ICO listing websites along with the amount collected by them (dependent variables). Different regression models implemented in thesis established the fact that there exists a statistically significant association between the aggregate ratings of the ICOs and the percentage of amount collected by them, and thus, the aggregate ratings available in ICO listings sites can be used as an indicator for ICO success. This thesis concludes that ICO entrepreneurs prior conducting an ICO should have a well-organized qualified team with expertise and experienced in relevant field with clear vision and strategy and should be focused in proper product development that is actually able to solve real-world problems. Also, they should not hesitate to provide information about themselves and their project in detail in their whitepapers and provide regular updates about their project in different social media platform. Likewise, from investors point of view, based on the findings of the thesis, it is advised that it would be wise to go through the experts’ ratings for ICOs available in different ICO listing platform however it would be profitable to gather as much information as possible about any ICO prior the investment and not rely on experts’ rating completely.