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Kickstarting blockchain: designing blockchain-based tokens for equity crowdfunding

Author

Listed:
  • Tobias Guggenberger

    (Branch Business & Information Systems Engineering of the Fraunhofer FIT
    FIM Research Center
    University of Bayreuth)

  • Benjamin Schellinger

    (Branch Business & Information Systems Engineering of the Fraunhofer FIT
    FIM Research Center
    University of Bayreuth)

  • Victor Wachter

    (University of Copenhagen)

  • Nils Urbach

    (Branch Business & Information Systems Engineering of the Fraunhofer FIT
    FIM Research Center
    Frankfurt University of Applied Sciences)

Abstract

Blockchain-based tokens seek to overcome the friction and opaqueness of the legacy financial infrastructure in the company funding process, particularly in the early-stage and equity crowdfunding domain. While Initial Coin Offerings and Security Token Offerings proposed a solution for crowdfunding, early-stage companies still face challenges in using blockchain as an alternative equity funding infrastructure. In this context, the idea of blockchain-based equity tokens remains hypothetical. In addition, the literature lacks design theory for the development and implementation of blockchain-based equity tokens. This research bridges this gap by designing, developing, and evaluating an equity token prototype for crowdfunding, following the design science research approach. We propose a refined crowdfunding model and derive seven design principles that contribute to the design theory of equity tokens. The research results show that blockchain-based equity tokens improve efficiency, transparency, and interoperability while meeting regulatory requirements and facilitating secondary market trading.

Suggested Citation

  • Tobias Guggenberger & Benjamin Schellinger & Victor Wachter & Nils Urbach, 2024. "Kickstarting blockchain: designing blockchain-based tokens for equity crowdfunding," Electronic Commerce Research, Springer, vol. 24(1), pages 239-273, March.
    • Handle: RePEc:spr:elcore:v:24:y:2024:i:1:d:10.1007_s10660-022-09634-9
    DOI: 10.1007/s10660-022-09634-9
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