|Cryptocurrency and blockchain has conjointly become trending buzzwords in the business
world today. As the blockchain technology has become older and more researched, its areas
of usage have broadened far beyond payment solutions like Bitcoin. In venture financing,
blockchain has been used to establish a prominent fundraising tool, called initial coin offerings
(ICO). An ICO is a crowdfunding method resembling initial public offerings, where ventures
issue a blockchain based token, subject to public sale. ICO has become a lucrative financing
method for blockchain affiliated ventures.
The hype around cryptocurrency has led to increased ICO attention. Everyone can invest in an
ICO, and thus, it has become a popular investment opportunity. This thesis looks at ICOs as
investment objects, with the aim to find out what an investor should consider before investing.
Additionally, we assess whether ICOs are profitable financial instruments relative to its close
substitutes, and evaluate measures to avoid scams.
The study is based on 104 companies that have had ICOs, and analyzes what factors influence
both ICO success rate, and post-ICO capital gains. Our results indicate that hype and pricing
is influential on the outcome of an ICO, which in turn is important for subsequent price
movements. We have also observed that venture capital seed funded companies performed
better in the ICO aftermath. By further using the results, we have also found that investors
may use these parameters when investing in an ICO to outperform both our benchmark
cryptocurrency Ethereum, and other ICOs.