Сomparison of Venture Financing and ICO as Growth Financing Methods

Traditionally, startups sell equity. The main reason for this choice is the inability to attract debt financing. However, an alternative ways of financing are actively develop nowadays. One of them is to bring company to Initial Coin Offering, or ICO for short. This work contributes to the features study of both methods and possible relationships with the properties of startups. The presented work focuses on the comparison of venture capital and ICO as the way to finance a startup. The author of the paper analyzed the features of attracted capital from both types of companies. The study used regression data analysis using proxy variables based on a sample that includes financial information about 339 startups and ICOs that attracted funding from 2017 to 2019. The results show that ICOs has a great potential as a method of capital raising, and they can successfully compete with venture capital. This trend is observed in all sectors, not significantly changing from industry to industry.