The paper proposes a model of staged nancing where entrepreneurs choose between Initial Coin Oering (ICO) and traditional funding methods such as Venture Capital (VC). Despite the complementarity between externality eects and value-adding services, information frictions in cryptocurrency markets induce an inecient selection equilibrium, where entrepreneurs with low-externality projects raise VC capital only to avoid adverse selection in later stages. Using data on funding rounds of blockchain startups, the paper provides empirical evidence for both the complementarity assumption and the selection result.