Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/315614 
Authors: 
Year of Publication: 
2024
Citation: 
[Journal:] Small Business Economics [ISSN:] 1573-0913 [Volume:] 63 [Issue:] 4 [Publisher:] Springer US [Place:] New York [Year:] 2024 [Pages:] 1415-1447
Publisher: 
Springer US, New York
Abstract: 
Abstract This paper examines the efficiency of the Initial Coin Offering (ICO) market through a search-theoretical lens. Search intensity associated with the process of identifying valuable startups is increasing in market granularity. DLT increases market granularity because asset tokenization lowers entry barriers. Lower-end entrants, however, increase aggregate search intensity but may lack search skills. The resulting search-related inefficiency creates a niche for intermediaries or institutional investors that specialize on search. Consistent with the theory, specialized crypto funds increase ICO market efficiency by reducing search frictions, inter alia, by shortening the time-to-funding and increasing the funding amount. At the same time, crypto funds extract sizable economic rents for their intermediation services. Overall, the study relates to the general trade-off between centralization and decentralization in entrepreneurial finance. It suggests that market frictions specific to early-stage crowdfunding of entrepreneurship may prevent “perfectly” Decentralized Finance (DeFi) markets from functioning efficiently.
Subjects: 
Entrepreneurial finance
Blockchain-based crowdfunding
Initial Coin Offering (ICO)
Tokenization
Crypto funds
Decentralized Finance (DeFi)
Persistent Identifier of the first edition: 
Additional Information: 
G23;G24;L26
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version
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