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In entrepreneurial finance, investments by the founding team in their own venture are perceived as a signal of value that indicates a positive future performance. Yet, emerging funding models such as ICOs challenge established theories. For instance, utility tokens issued in an ICO, which sometimes raise millions of dollars for the venture, are listed on exchanges – just like shares – while they may also be utilized within the venture's ecosystem. Applying signaling theory and a resource-based view to ICOs, this study examines signals of post-funding venture performance. In contrast to established signaling concepts, we find a positive relation between higher token dispersion (i.e., lower token retention) and longer-term venture performance. We explain this with the unique features of tokens as both investment and utility tools. Further, results show that a venture’s endeavor to provide more information to investors regarding its strategy strengthens the relation of token dispersion and venture performance.



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