Giving coins for free: Does digital outsourcing of technical and advisory support influence the success of initial coin offerings (ICOs)?

Initial coin offerings (ICOs) have emerged as a novel mechanism for financing entrepreneurial ventures. This relatively new application of blockchain technology allows a venture to raise money directly from the crowd by creating and selling its own coin or utility token in exchange for future use of this coin to purchase the services and products the venture is aiming to create. During the ICO ventures often use digital technologies to outsource services and build social capital. Despite the explosive growth of ICOs, little is known about the impact of these outsourcing strategies on the ICOs fundraising outcome. This paper presents explanatory research to better understand the role and potential impact of ICO strategies in outsourcing technical and advisory services by offering coins for free. More particularly, using data from 2081 ventures that sought to raise an ICO over the period 2016–2018, we examined the extent to which ventures can influence the likelihood of ICO success by adopting strategies aimed at outsourcing services and building social capital, namely by providing free coins to outsource expertise and by adapting social media campaigns. Findings suggest that although the use of professional social media platforms is associated with both ICO success and a higher level of fundraising, over‐generous outsourcing strategies had a negative impact on the ICO's likelihood to succeed.