Leveraging Institutional Intermediaries: Entrepreneurial Strategies to Contact Investors on a Fundraising Platform
Abstract: How do entrepreneurs leverage institutional intermediaries to acquire financial resources? We tackle this question by examining entrepreneurial strategies to contact investors on a fundraising platform. Using data from a Chinese platform that connects entrepreneurs with investors, we find that the effects of institutional intermediaries depend on how entrepreneurs leverage them. Specifically, we find that stepping-stone strategies are rewarded, whereas status-picking strategies are penalized online. Moreover, we find that stepping-stone strategies are more beneficial in less developed regions, whereas status-picking strategies are less penalized in more developed regions. This paper contributes to prior literature on institutional intermediaries, network tie formation, and platforms. First, while prior work focuses on how institutional intermediaries impact entrepreneurs, we explore how entrepreneurs leverage intermediaries. Second, we contribute to network dynamics by investigating sequential attempts for initial tie formation and discussing initial tie formation through online intermediaries. Finally, while prior work on platforms focuses on the strategy of platform providers, this paper examines the strategy of platform users.
