Can you rely on enough friends and followers to kickstart your entrepreneurial idea?

Authors and scholars investigating the phenomenon of crowdfunding have recently identified Social Network Theory as the most promising literature frontier to advance the ongoing academic debate, encouraging future researchers to engage in cross-disciplinary studies adopting this theoretical lens (McKenny et al., 2017). In an attempt to answer this call and expand the body of knowledge on the phenomenon, this study adopts social network theory notions to shed light on the dynamics observed in reward-based crowdfunding. Specifically, acknowledging the inherently social and collective nature of crowdfunding, this research has focused on unveiling how structural and relational properties – Social Network Size and Social Network Strength – of a project creator are related to the success of his or her crowdfunding campaign. On the basis of prior contributions, this research has theorized that an Entrepreneur’s Social Network Size exerts a positive influence on the achievement of Early financial Support during the first days after campaign inception (H1). In turn, given the influence exerted by past backers’ investment decisions on the choices of hesitant potential investors, and because of its role as a trigger for herding behaviour, it has been advanced that Early Support acts as a mediating factor on the positive influence that Network Size exerts on the achievement of Crowdfunding Success (H3). Moreover, it has been theorized that the presence of an Entrepreneurial Team reinforces the positive effect of Network Size on the reaching of Early Support (H2), while the intensity of the ties between the entrepreneur and his or her network of connections – his or her Social Network Strength – positively affects the chances of an early supported campaign to reach a successful outcome at closing day (H4). To verify these relationships, this empirical study has tested primary data collected following in real-time 117 Kickstarter projects launched between the 14th of March and the 6th of May 2017, adopting a research design and a methodological approach specifically conceived to overcome recurrent shortcomings observed in prior studies with regards to the time of observation of the measures and to the sources of data collection. The findings obtained supported the positive relationship between the Entrepreneur’s Social Network Size and Early Support, and their significant positive effect on the reaching of Crowdfunding Success, confirming the existence of partial mediation between the variables. With regards to the moderating roles played by the project creator’s Team and his or her Social Network Strength, the results provided confirming evidence 8 F. De Pillis of the existence of a positive significant effect only in the latter case, demonstrating that the extent to which project creators interact with their community of relatives, friends, acquaintances, and backers over the course of the campaign enhances the likelihood of achieving a successful outcome in reward-based crowdfunding by creating trust between the parties, reducing information asymmetries, and by contributing to keep the buzz around the campaign alive. Besides contributing to the advancement of academic literature by shedding light on the nature of the relationships between Social Network properties and crowdfunding, this study provides aspiring entrepreneurs with insights and food for thought. On the one hand, it is advised that future campaign creators, before launching their crowdfunding projects, should assess the size of their network of contacts while asking themselves a fundamental question: “Can I rely on enough friends and followers to “kickstart” my entrepreneurial idea?”. This research, in fact, by providing evidence that not only the size per se, but also the achievement of a certain threshold of financial support during the first days of a campaign draws an important line between failure and success, signals that aspiring entrepreneurs should carefully weigh whether they can leverage on a large enough pool of contacts willing to financially support their endeavour throughout the campaign and especially in its very first days, if they want to improve and ensure their success. On the other hand, this research shows how the strength of the relationships that an entrepreneur is able to build and nurture with its network of connections displays a significant reinforcing effect on the chances of success. Then, it is suggested that entrepreneurs must be mindful of the importance of frequently interacting with their community over the course of the entire campaign, both to ensure that backers feel involved in the entrepreneur’s venture and to maintain momentum around the crowdfunding project to keep attracting other potential backers.