Initial Coin Offerings as a Form of Alternative Financing for Start-Ups: A Systematic Literature Review and Bibliometric Analysis

Introduction

Start-up firms can face challenges in acquiring funds for their operations and management. The literature indicates that private financial markets, such as peer-to-peer lending, are often used by investors to share assets among different loans, and this can be particularly beneficial with the development of technology. However, it can be difficult for Start-ups to acquire financial support from traditional sources like banks and financial institutions because of asymmetrical information and vague business plans. Many Start-ups turn to alternative financing methods such as venture capital and angel investors, which are supported by governments and public agencies through acceleration programs and research grants, among others. Even with these options, some Start-ups still encounter difficulties in the fundraising stage due to venture capitalists' uncertainty of the Start-up's ability to create value in the future.

However, even with support from various agencies, some Start-ups still encounter difficulties in the fundraising stages. A key issue in this regard is that venture capitalists may have difficulty envisioning how Start-ups will create value in the future. This means that only certain sectors of business may be able to attract private investment.

In light of these challenges, it is suggested in this exploratory discussion that the digital environment can be used to promote and communicate the value of particular businesses, and that a digital asset exchange market can facilitate this possibility. The current study examines how the concept of Initial Coin Offerings (ICOs) can be used by Start-ups to access finance in the digital environment.

This study argues that the digital environment can help overcome these challenges by providing a way for Start-ups to communicate and promote their value to potential investors through a digital asset exchange market. The study examines how Initial Coin Offerings (ICOs) can be used to access finance, as well as the legal and regulatory environment surrounding digital assets that need to be considered. It also looks into the concept of fractional ownership of digital assets as a way for Start-ups to raise funds by sharing ownership of their assets among multiple parties. The study also acknowledges that while majority of the research around ICOs focus on cryptocurrency and its effect on speculation, The concept of tokenization, issuing digital coin/tokens to acquire funds from the public is getting traction as well. The difficulties that Start-up firms may face in obtaining funding for their operations and management. The text references the private financial market, specifically peer-to-peer lending, which is commonly used by investors to share assets among different loans. The advancement of technology in this field can lead to improved investment opportunities. The source cited in the passage, Babaei and Bamdad (2020), likely provides more information on the specific ways in which technology has improved the peer-to-peer lending process for investors.

This passage continues to discuss the challenges Start-up firms may face in acquiring funding. It states that Start-up firms typically acquire financial support for their business operations and management in a similar way, but they may encounter difficulties due to asymmetrical information and vague business plans. Asymmetrical information refers to a situation where one party has more or better information than the other. In the context of Start-up firms seeking funding, it could mean that the investors or funding sources have more information about the industry, market, or the Start-up itself, which might make it difficult for the Start-up to secure funding. The reference to vague business plans refers to an unclear or underdeveloped plan for how the Start-up intends to create value, generate revenue, or achieve profitability, it can also be challenging for them to secure funding from potential investors or funding sources. The source cited in this passage, Awaya and Krishna (2021), likely provides more information about the specific ways in which asymmetrical information and vague business plans can be a barrier for Start-ups in their quest for funding. The issues of asymmetrical information and vague business plans, it's frequently hard for start-up firms to secure financial support from banks and other financial institutions. It references to a study by Chen & Chen, (2020) which likely provides more detailed information about this issue and how it affects the ability of start-up firms to secure funding from traditional financial institutions. The study might have also explained reasons behind it and how frequent this difficulty is.