Relation between start-ups’ online social media presence and fundraising

Abstract

The emergence of social media such as Facebook and Twitter have changed the way human beings communicate and interact in the context of business settings. In order to further explore the use of social media for entrepreneurs, we have explored how entrepreneurs use social media for fund-raising purposes. The novelty of this study is the use of social relationships (represented by social network features) as the main way to predict whether or not funding investments will occur. We use Application Programming Interfaces (APIs) to collect entrepreneurs' funding data from Crunchbase and entrepreneurs' social media data from Facebook and Twitter. We selected 123 companies in the "web" and "software" industries from Crunchbase. All the companies use Facebook and Twitter for fundraising purpose. Our results show that social media is significant for start-ups in their success or failure in fund raising. Investing energy into utilizing online social media and exhausting these platforms consciously contributes to the financial success of start-ups. Therefore, startups which are popular among online fans and followers can manage to raise larger amounts of funding in the early stages if it's done correctly.

Blockchain-Based ICOs: Pure Hype or the Dawn of a New Era of Startup Financing?

“…Moreover, they find a quadratic relationship between the number of Twitter posts and funds raised, such that more posts initially increase funding while too many posts harm the outcome. In a similar vein, Yang and Berger (2017) have recently shown a positive relationship between the number of followers and the amount of startup funding. Likewise, Nevin et al (2017) show that the number of social media posts has a positive effect on funds raised through crowdfunding.…”

“…Based on existing research in crowdfunding and venture capital, we posit that social media activity, as proxied by the number of followers and the number of postings, will positively influence funds raised at ICOs. At least two transmission mechanisms for this expected effect come to mind (Jin et al 2017;Yang and Berger 2017): First, social media activity may serve as a marketing channel for announcing ICOs and distributing information about the underlying new tokens. Thus, in line with the "salience view" (Solomon et al 2012), increased social media activity will lead to increased salience of an ICO, directing potential investors to the upcoming investment opportunity (Sprenger et al 2014).…”

Blockchain-Based ICOs: Pure Hype or the Dawn of a New Era of Startup Financing?

“…Moreover, they find a quadratic relationship between the number of Twitter posts and funds raised, such that more posts initially increase funding while too many posts harm the outcome. In a similar vein, Yang and Berger (2017) have recently shown a positive relationship between the number of followers and the amount of startup funding. Likewise, Nevin et al (2017) show that the number of social media posts has a positive effect on funds raised through crowdfunding.…”

“…Based on existing research in crowdfunding and venture capital, we posit that social media activity as proxied by the number of followers and the number of postings will positively influence funds raised at ICOs. At least two transmission mechanisms for this expected effect come to mind (Jin et al, 2017;Yang & Berger, 2017): First, social media activity may serve as a marketing channel for announcing ICOs and distributing information about the underlying new tokens. Thus, in line with the "salience view" (Solomon et al, 2012), increased social media activity will lead to increased salience of an ICO, directing potential investors to the upcoming investment opportunity (Sprenger et al, 2014).…”

Crowdfunding Among Event Entrepreneurs: A Conceptual Paper

“…In result, previous studies show that the emergence of online networking has opened the door for innovative companies to connect with each other and to operate more efficiently [15]. One way to understand how start-ups can increase their chances of receiving funding investment from investors is to understand one's business networking behavior [34]. For example, Agrawal et al (2011) suggested that understanding both the mechanisms of crowdfunding and how to reach networks is the key to crowdfunding success.…”