Entrepreneurial Finance

Der Schwerpunkt der Forschungsgruppe Entrepreneurial Finance liegt auf Fragen der Kapitalbeschaffung für Start-up-Unternehmen im Besonderen. Darüber hinaus beschäftigen sich unsere affiliierten Forscher mit dem Thema Digital Finance & Fintech im Allgemeinen.

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Ausgewählte Publikationen

Decentralized finance, crypto funds, and value creation in tokenized firms

Douglas Cumming, Niclas Dombrowski, Wolfgang Drobetz, Paul P. Momtaz
HFRC Working Paper Series | Version 05/2022
Crypto Funds (CFs) represent a novel investor type in entrepreneurial finance. CFs intermediate Decentralized Finance (DeFi) markets by pooling contributions from crowd-investors and investing in tokenized startups, combining sophisticated venture- and hedge-style investment strategies. We compile a unique dataset combining token-based crowdfunding (or Initial Coin Offerings, ICOs) data with proprietary performance data of CFs. CF-backed startup ventures obtain higher ICO valuations, outperform their peers in the long run, and benefit from token price appreciation around CF investment disclosure in the secondary market. Moreover, CFs beat the market by roughly 2.5% per month. Their outperformance is persistent, suggesting that CFs deliver abnormal returns because of skill, rather than luck. These performance effects for CFs and CF-backed startups are driven by a fund’s investor network centrality. Overall, our study paves the way for research on what some refer to as the “crypto fund revolution” in entrepreneurial finance.

Valuing start-up firms: A reverse-engineering approach for fair-value multiples from venture capital transactions

Johannes Barg, Wolfgang Drobetz, Paul P. Momtaz
Finance Research Letters | 03/2021 | Forthcoming
The valuation of start-up firms is challenging, yet highly relevant for entrepreneurs and financiers alike. We reverse-engineer fair-value multiples by comparing the firm value at the time of financing with the firm value at the time of exit. Our framework produces reliable valuation multiples from observed venture capital transactions per industry and financing round. Despite their simplicity, sanity checks confirm that our multiples are highly performant in describing common valuation characteristics. Valuation multiples are higher when more experienced investors are involved, and when the exit occurs through an IPO rather than an M&A. In contrast, later stage financing rounds and larger investment consortia are associated with lower valuation multiples.

Investor sentiment and initial coin offerings

Wolfgang Drobetz, Paul P. Momtaz, Henning Schröder
Journal of Alternative Investments | 04/2019
The authors examine to what extent the market for initial coin offerings (ICOs) is driven by investor sentiment. Their results, based on a comprehensive set of sentiment and coin price data, suggest that the ICO market is driven by crypto-related sentiment, but is almost unrelated to general capital market sentiment. Among the crypto-related sentiment, social media channels, rather than traditional news channels, are the main source of investor sentiment. The authors find that ICO firms exploit “windows of opportunity” and avoid periods of negative sentiment. Coins listed during periods with negative investor sentiment generate negative returns in the short run. Moreover, returns to investors on the first day of trading predict long-run returns up to six months.