Venture capital, crowdfunding, and initial coin offering: The interconnectedness of entrepreneurial financing channels in Europe

Abstract

Objectives

The main objective of this study is to examine the potential relationship between the more recent funding mechanisms – crowdfunding and initial coin offering, in this case – and the traditional ones – venture capital, in this case. Towards this goal, the study will review the current state of literature and conduct correlation analyses of the three aforementioned mechanisms.

Summary

This paper reviewed the literature in entrepreneurship financing and found a clear gap in researches for the interaction between different funding mechanisms. Based on the findings in this literature review, the paper conducted correlational analyses of three time-series, representing the amount raised via three channels: venture capital, crowdfunding, and initial coin offering. To prepare for these analyses, measures have been taken to produce stationarity from these non-stationary time-series. Both the differencing for stationarity and the correlation analyses allowed for interesting observations.

Conclusions

This led to three main insights: (1) all the time-series exhibit strong rising trend and some seasonality, (2) amount raised via crowdfunding has a slight negative correlation with that via venture capital, and (3) there is no statistically significant relationship between venture capital and ICO.