From Friendfunding to Crowdfunding

Tie strength, media use, and crowdfunding.

Echy Wong

December 19, 2023

Crowdfunding has become a popular way for entrepreneurs and creative individuals to raise funds for their projects. However, not all crowdfunding campaigns are successful. In this essay, we will explore the relevance of relationships, social media, and platform activities to crowdfunding performance. We will analyze a study conducted by Irma Borst, Christine Moser, and Julie Ferguson, which sheds light on how project creators can attract funding from potential resources outside their close network.

The study conducted by Borst et al. (2017) analyzed the usage of social media and crowdfunding platforms to activate latent ties and add economic value to crowdfunding efforts. The researchers defined project performance as the daily amount donated per project, consistent with prior work (Zhang and Liu, 2012). They measured all variables per project per day, including project updates, social media messages, and tie strength.

Tie strength was measured using Haythornthwaite’s (2002, 2005) relationship typology, which categorizes strong ties as family, friends, and direct colleagues, and weak ties as acquaintances and casual contacts. The researchers also introduced a third tie strength: latent, defined as a technically available connection that is not yet activated.

The researchers found that created value differs per type of tie. They also showed how different forms of online activity influence the relationship between tie strength and the financial performance of the project. Lagged tweets had a positive, significant relation with project performance, but lagged Facebook messages did not show a significant effect on project performance. The effectiveness of informative and solicitation messages on Facebook and Twitter may be driven by the nature of the social network.

Social media activities were operationalized in various ways in the hypotheses: frequency of project updates on the crowdfunding platform (website), number of Facebook messages, and number of tweets (messages) on Twitter. The researchers counted the updates, messages, and tweets that project creators posted per day throughout the entire campaign, ignoring updates or messages posted outside the funding period, as well as messages not referring to the crowdfunding project. To capture the effect of project updates and social media updates, they measured these activities on the day prior to the day of the donation measure.

Tie strength was a key variable in the study, categorized as strong ties (family, friends, and direct colleagues), weak ties (acquaintances and casual contacts), and latent ties (technically available connections that are not yet activated). The researchers found that the number of social media messages posted by the project creator moderates the influence of tie strength on project performance. They hypothesized that weak and latent ties would provide more funding when more social media messages are posted.

The study's findings revealed that successful crowdfunding projects mobilize previously unknown funders, indicating the importance of latent ties for project success in reward-based crowdfunding. Project creators can extend the reach of their open call for donations on social media. However, the effectiveness of social media messages does not follow a simple formula: Higher frequency of social media messages does not automatically result in higher project performance. Rather, the effects vary across the different tie strengths. Therefore, the number of social media messages needs to be carefully balanced: not too many and not too few messages. In addition, project creators’ messages should clearly indicate that they are asking for financial support, as messages without clear solicitation seem to be less effective in collecting donations.