This paper takes as its central focus crowdfunding – and explores whether this newly trendy (but not truly new) and still evolving phenomenon represents (1) a fundamental paradigm shift in venture financing, or (2) an incremental relocation of traditional financing approaches from the “real” to the “online” world. Rephrased in network theoretic terms, the paper explores whether crowdfunding represents (1) the distributed acquisition of resources through abundant and structurally disconnected “weak” ties, or (2) a technology-enabled mechanism for the acquisition of initial resources through “strong” ties who then refer out to “weak” ties for subsequent resource provision. Much hype has accompanied crowdfunding sites’ claim to be democratizing the funding process by giving resource access to innumerable entrepreneurs. But crowdfunding might in fact be traditional financing “on steroids” (i.e., the usual process, amplified by Internet-facilitated connectivity).
Grossman, Elissa B. and Nakats, Robbie
"CROWDFUNDING AND SOCIAL NETWORK THEORY: AN EMPIRICAL INVESTIGATION (SUMMARY),"
Frontiers of Entrepreneurship Research: Vol. 33
, Article 6.
Available at: http://digitalknowledge.babson.edu/fer/vol33/iss3/6