Abstract

Initial Coin Offerings (ICOs), i.e. the initial offer of a crypto-token, represent an increasingly popular method to raise money. However, the determinants of ICOs’ returns for investors are still overlooked. Following this cue, the empirical outcomes of our study based on crypto-tokens issued between 2017 and 2018 evidence the main determinants of ICOs’ returns: first, crypto-tokens returns are positively associated to Ether’s returns; second, ICO price is negatively associated to later price increases; third, crypto-tokens returns are lower when they are offered in presale; finally, the more a crypto-token price increases between the ICO and the listing-date on the secondary-market and the more its price rises in the following month. In so doing, we contribute to a better understanding of the ICO phenomenon and highlight which aspects may benefit fund raising, which are relevant for the establishment of new startups and more broadly for the economic development of a country.