Events

Ms. Willow Wu
Ph.D. Candidate in Management Science & Engineering
Stanford University

Online entrepreneurial fundraising platforms not only serve as information intermediaries that connect entrepreneurs with investors, but also serve as institutional intermediaries that enable entrepreneurs to develop capabilities through interacting with investors. Previous literature has discussed how institutional intermediaries impact entrepreneurs but has neglected how entrepreneurs use institutional intermediaries. To address this gap, we explore how entrepreneurs leverage online institutional intermediaries to develop capabilities and increase the likelihood of receiving investors’ intention to build initial connections. Specifically, we propose a steppingstone strategy to leverage institutional intermediaries. The process of building stepping-stones starts with contacting high-status investors, gets accelerated by receiving concrete replies, and is accomplished through iterations of revising business plans. We find support for the stepping-stone mechanism by analyzing 780,904 business plan submissions from entrepreneurs and 49,145 replies from investors on a platform. Overall, this paper contributes to institutional intermediary literature by examining entrepreneurial agency and contributes to social network literature by analyzing the early-stage interactions between entrepreneurs and investors in initial tie formation.