Digital social capital and performance of initial coin offerings

The Initial Coin Offering (ICO) has emerged as an original way for companies to leverage funding. In this study, we analyze 537 companies that chose the ICO model in 2017 and investigate how their digital social capital is related to the rank of the ICO based on the market capitalization. The goal of this work is to better understand the role of digital social capital in ICO success. Multiple facets of digital presence are analyzed, such as website, ICO activity on social networks like Twitter, the community built and the activeness of the community. We apply an exploratory factor analysis to leverage the main factors that can be used as latent variables, and build an original research model. Structural equation modelling is used for model evaluation and hypothesis testing. Curvilinear analyses allow us to obtain a finer vision of our results. We also verify the robustness of our results in predicting the ICO rank further in time. Our results suggest that social capital is indicative of the ICO performance. The website audience is found to be the most predictive. However, the audience and the centrality of an ICO in the community seems less important than the activeness of an ICO and of the related community on social networks.