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With the launch of Kickstarter, a global reward-based crowdfunding platform, serial crowdfunding became a viable counterpart to serial entrepreneurship. Social capital represents the resources acquired during social relationships (Cai et al., 2021). Serial crowdfunders preserve while serial entrepreneurs transfer or terminate their business and cannot always effectively employ their original social capital (Carbonara et al., 2010). In the following essay, the differences between the social capital accrued by traditional serial entrepreneurship and serial crowdfunding will be explained, and the effect of these differences on project finance will be considered.
The types of social capital built via serial entrepreneurship or serial crowdfunding have two considerable differences. First, social capital is associated with the campaigns’ success, so serial crowdfunders rely on the platform’s community, while traditional entrepreneurs cannot build such a community from existing customers and investors. Serial crowdfunders establish internal social capital by attracting active platform users with the same values, which creates an advantage for subsequent campaigns (Buttice et al., 2017). Serial entrepreneurs also hold diverse social capital, which might become inadequate after they sell/transfer their original businesses. Second, social capital developed through serial crowdfunding has a limited life cycle since various types of internal social capital from previous campaigns substitute each other. The external network of suppliers, business partners, and customers helps develop new products or improve existing businesses (Daniel et al., 2018). Moreover, serial entrepreneurs have substantial experience and managerial skills to efficiently attract and negotiate with new investors and build durable external networks, so their social capital can be reestablished, ensuring adaptability to ever-changing business demands.
The differences in social capital affect project finance in several ways. Serial crowdfunders rely on personal contacts to ensure their projects’ early financing via bank loans, angel investors funds, or venture capitals. Serial entrepreneurs transfer social resources from previous ventures or establish new networks (Simmons et al., 2017). Social capital is a crucial resource, as it engages information and trust, facilitating decision-making and decreasing uncertainty among stakeholders and entrepreneurs (Skirnevskiy et al., 2017). Thus, serial crowdfunders can gather stable funding for their subsequent campaigns by appealing to the platform’s community, while serial entrepreneurs have to find appropriate investors for their new projects. Serial entrepreneurs may need to adjust leadership approaches to maximize social capital, retain connections, and gain control over the outcomes and financial stability of their future ventures (Simmons et al., 2017). Maintenance of social connection with campaign supporters can result in the fast acquisition of venture capital funds and their increased amount, but the limited life cycle of serial crowd funders’ internal social capital should be considered.
To sum up, serial crowdfunders rely on internal platform-based funding support that is characterized by the effective acquisition of venture capital and a limited life cycle, while serial entrepreneurs transfer existing investors/customers or use the experience to find new supporters. The differences between the types of social capital influence project finance that comes from either stable community supporters in crowdfunding or previous/new external social capital in serial entrepreneurship.
References
Buttice, V., Colombo, M. G., & Wright, M. (2017). Serial crowdfunding, social capital, and project success. ET&P, 41(2), 183–207. Web.
Cai, W., Polzin, F., & Stam, E. (2021). Crowdfunding and social capital: A systematic review using a dynamic perspective. Technological Forecasting & Social Change, 162. Web.
Carbonara, E., Tran, H. T., & Santarelli, E. (2020). Determinants of novice, portfolio, and serial entrepreneurship: an occupational choice approach. Small Business Economics, 55, 123–151. Web.
Daniel, S., Midha, V., Bhattacherhjee, A., & Singh, S. P. (2018). Sourcing knowledge in open source software projects: The impacts of internal and external social capital on project success. The Journal of Strategic Information Systems, 27(3), 237–256. Web.
Simmons, S. A., Maldonado, T., & Randolph, A. (2017). The social capital of serial entrepreneurs: Using lessons of humility to build not burn it. Academy of Management Proceedings. Web.
Skirnevskiy, V., Bendig, D., & Brettel, M. (2017). The influence of internal social capital on serial creators’ success in crowdfunding. ET&P, 41(2), 209–236. Web.
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