Initial Coin Offering (ICO) emerged as new financial instrument in entrepreneurial finance in recent years, often regarded as an open request for funding in terms of cryptocurrencies in return for tokens which could be later sold on online platforms or used to get different forms of compensations. Generally, ICOs are unregulated type of cryptocurrencies, issued by new innovative blockchain firms with the purpose of supporting distributed applications and facilitating users to interact directly without any intermediate platform. This removal of intermediaries, by implementation of blockchain technologies in ICOs, results in lower costs required for fundraising and democratization of the venture capital.
The growth of ICO market is increasing globally with few countries leading the ICO market. In terms of number of ICOs and the amount of funds that is raised through them, Russia, US, and Switzerland dominate the global ICO market while China has banned ICO and crypto trading, despite being one of the largest cryptocurrency market in the past. ICOs are gaining popularity and in 2007, the funds raised through ICOs were $5.3 billion worldwide, $1b billion more than the total European fund raised through venture capital and $1.9 billion more than collective EU and US fund raised through crowdfunding. In 2017, venture capital investments during the early-stages were surpassed by funding raised through ICOs and there were 585 more deals in ICOs with additional $4 billion than VC investments in blockchain startups.