Exploring the Success Factors of Security Token Offerings: An Empirical Approach

Initial coin offerings (ICOs) have been established as an innovative capital-raising method. Nevertheless, numerous cases of ICO fraud are having a negative impact on investors. In particular, the lack of legal certainty (e.g., creditor protection) and the lack of direct participation in a company's success (e.g., profit distribution) have led to an increasing number of security token offerings (STOs). These offer investors a degree of legal certainty and direct participation in company profits. However, to date, little scientifically-based knowledge exists regarding the factors that influence the funding success of an STO. We address this research gap by first identifying possible success factors for funding and then systematically analyzing 38 STOs that have already been carried out in order to determine the influence of those factors. Our analysis indicates that high-quality prototypes and high-quality teams are major drivers of STO funding success. Based on these results, we discuss the implications for science and practice, outline the limitations of our work, and identify further research needs.