The Crowdfunding of Altruism

Abstract

This paper introduces a machine learning approach to quantify altruism from the linguistic style of textual documents. We apply our method to a central question in (social) entrepreneurship: How does altruism impact entrepreneurial success? Specifically, we examine the effects of altruism on crowdfunding outcomes in Initial Coin Offerings (ICOs). The main result suggests that altruism and ICO firm valuation are negatively related. We, then, explore several channels to shed some light on whether the negative altruism-valuation relation is causal. Our findings suggest that it is not altruism that causes lower firm valuation; rather, low-quality entrepreneurs select into altruistic projects, while the marginal effect of altruism on high-quality entrepreneurs is actually positive. Altruism increases the funding amount in ICOs in the presence of high-quality projects, low asymmetric information, and strong corporate governance.

Sustainable Management of Manufacturing Processes: A Literature Review

“…Altruism is a personal characteristic that epitomizes a person's concern for others' well-being. In business, the characteristic serves as a motivator of social responsibility within a company [45]. In fact, other studies recognize altruism as a precondition to social entrepreneurship oriented at social value creation [46].…”

The New Tokenomics of Crowdfunding

“…For instance, Mansouri and Momtaz (2022) use the content of whitepapers to extract a score for each token offering to reflect the environment, society and governance relevance of the venture, and study its effect on fundraising success. Faust et al (2022) quantify altruism based on the linguistic style of whitepapers and examine its effect on token offering success, while Meoli and Vismara (2022) extract information from the structure of each paper. Not all analysis of whitepapers uses machine learning techniques.…”

“…In the same vein, Aggarwal, Hanley and Zhao (2019) and Yen, Wang and Chen (2021) examine external quality ratings, while Belitski and Boreiko (2022) interpret additional venture characteristics as quality signals. 6 For instance, Faust et al (2022) and Mansouri and Momtaz (2022) examine whitepapers using machine learning models, while Samieifar and Baur (2021), Florysiak and Schandlbauer (2022), Kasatkin (2022) and Thewissen et al (2022Thewissen et al ( , 2023) also focus on whitepaper characteristics; Roosenboom, van der Kolk and de Jong (2020) examine bonus schemes and offering duration; Amsden and Schweizer (2018) consider the ETH/USD traded price and volatility; Albrecht, Lutz and Neumann (2020) focus on the initial offering price and online search trends; Blaseg (2018), Momtaz (2020), Campino, Brochado andRosa (2021), Guzman, Pinto-Gutierrez and Trujillo (2021) Wei (2021), andXu et al (2021) focus on venture team characteristics; venture CEO characteristics are examined by Momtaz (2021aMomtaz ( , 2021c and Colombo et al (2022);Fisch, Meoli and Vismara (2022) examine the choice of token offerings versus traditional financing alternatives; topics such as venture capital investor participation, venture domicile and fraudulent behaviour are examined by Giudici and Adhami (2019), An et al (2021), Hackober and Bock (2021) (similar to the topics examined for traditional venture capital finance by Capizzi, Croce andTenca, 2022 andLevasseur, Johan andEckhardt, 2022), Shrestha et al (2021), Hornuf, Kück andSchwienbacher (2022), Swartz (2022), and…”

The New Tokenomics of Crowdfunding

“…In the same vein, Aggarwal, Hanley and Zhao (2019) and Yen, Wang and Chen (2021) examine external quality ratings, while Belitski and Boreiko (2022) interpret additional venture characteristics as quality signals. 6 For instance, Faust et al (2022) and Mansouri and Momtaz (2022) examine whitepapers using machine learning models, while Samieifar andBaur (2021), Florysiak andSchandlbauer (2022), Kasatkin (2022) and Thewissen et al (2022Thewissen et al ( , 2023) also focus on whitepaper characteristics; Roosenboom, van der Kolk and de Jong (2020) examine bonus schemes and offering duration; Amsden and Schweizer (2018) consider the ETH/USD traded price and volatility; Albrecht, Lutz and Neumann (2020) focus on the initial offering price and online search trends; Blaseg (2018), Momtaz (2020), Campino, Brochado and Rosa (2021), Guzman, Pinto-Gutierrez and Trujillo (2021) Huang, Vismara and Wei (2021), and Xu et al (2021) focus on venture team characteristics; venture CEO characteristics are examined by Momtaz (2021aMomtaz ( , 2021c and Colombo et al (2022);Fisch, Meoli and Vismara (2022) examine the choice of token offerings versus traditional financing alternatives; topics such as venture capital investor participation, venture domicile and fraudulent behaviour are examined by Giudici and Adhami (2019), An et al (2021), Hackober and Bock (2021) (similar to the topics examined for traditional venture capital finance by Capizzi, Croce andTenca, 2022 andLevasseur, Johan andEckhardt, 2022), Shrestha et al (2021), Hornuf, Kück and…”