It’s believed that entrepreneurs are able to overcome information asymmetry with potential investors and secure funding by retaining a greater share in their own early-stage ventures. But real-world financing markets have made empirical research on retention challenging.

Samuel Rosen and his co-authors use a unique market—initial coin offerings (ICOs)—to overcome limitations of real-world financing markets and prove that greater share retention was associated with high fundraising success and better performance beyond the fundraising stage.

By studying this phenomena through the ICO market, Rosen is able to empirically support the idea that share retention is a valid signal of quality in early-stage financing markets.