Nikiforova, Koltsova, Koltsov, Braslavski
StartupPoint.ru: The use of online social networks for startup development
Introduction. Information technology (IT) startups is a lucrative area of investment that in
recent years has attracted millions of dollars and doubled in size, according to the data
provided by the Internet Initiatives Development Fund (http://www.iidf.ru). Compared to
laboratory or equipment-intensive ventures, IT startups have sufficiently low starting
costs, however, nascent entrepreneurs often lack capital for further growth. Various
regional, government, and bank initiatives provide support for selective projects but high
selectivity of these organizations pushes entrepreneurs to search for support elsewhere.
Internet provides the means and opens new channels of finding investors. Websites such as
StartupPoint.ru give projects the opportunity “to be seen” and bring together startup
developers and investors. The effective use of internet becomes yet another factor that may
influence the success of finding investors and potential clients. This study examines the
effectiveness of the use of online social networks for startup development by Russian
nascent entrepreneurs. It addresses the question - what role do online social networks
such as VK.com (Vkontakte.ru) play in development of startups?
Question. Social network theories (Granovetter, 1973, 1985; Burt, 1992; Coleman, 1988,
1990; Lin, 1999, 2002) provide a powerful explanation of why some people are more
successful in securing resources through networks. For nascent entrepreneurs social
networks become their social capital – a powerful tool for self-marketing and the
distribution of information about their business projects. It has been previously found that
marketing at internet social networking sites has a greater impact than traditional
marketing vehicles (Trusov, Bucklin, Pauwels, 2009) and that social networking sites hold
a great potential when used as business tools (Venkatraman, 2010). Startup project sites
and entrepreneurs’ online activities become the means of conveying trust through effective
marketing and self-promotion. The information “given” and “given-off” by online activities
can influence potential clients and investors. In our study we examine 1) the range of
strategies used for promoting (or hindering) startup projects, 2) the differences in the use
of social media by successful (active) and less successful (inactive) project owners, and 3)
the differences in the use of social media by nascent entrepreneurs and average online
users of the same age and gender as nascent entrepreneurs.
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Nikiforova, Koltsova, Koltsov, Braslavski
Data and method. The database of nascent entrepreneurs was collected from
StartupPoint.ru which is “the first and the largest community in RuNet for professional
venture capital investments.” From all registered startup developers up and including the
year 2013 we identified and used in the study (N=2311) only those who had a profile in the
Russian online social networking site VK.com (VKontakte.ru). Using content coding of
project websites we separated entrepreneurs into least and more successful groups and
used statistical tools to analyze the strategies for promoting their startup ventures.
Findings. Internet is a valuable tool for startup development. The ability to effectively use
online social networks for marketing and for gaining new customers may prove to be
critical to the success of new ventures. IT startup developers are a group of young (15-35)
professionals, predominantly male, with higher education and IT work experience. Our
findings uncover a range of project stages and strategies used in promoting startup
ventures. Although, successful projects were more complete, provided key information, and
were effectively promoted in social networks, the results varied depending on the nature of
business and the feasibility of the business model. The behavior and online presentation of
entrepreneurs in many cases undermined their role as business leaders. Considering that
users of online social sites often re-create their off-line selves (Bullingham, Vasconcelos,
2013), the findings identify the lack of key marketing and business skills among nascent IT
entrepreneurs.
Importance. The dream of starting an IT-related business attracts many young people and
mostly students and graduates of technical schools. IT startups have traditionally been
perceived to be the examples of innovative self-employment and entrepreneurship (B.Y.
Serbinovskiy, Zvereva, Klevakov, 2013) but the means of promoting such ventures have
many subtleties and considerations (see Chepurenko, 2012). IT startups have the potential
to offer new services and grow into a firm but the lack of critical business skills of effective
social media marketing is likely to encourage mistrust on the part of investors and, as a
result, lead to higher failure rates among startups. The results of this research emphasize
the importance of business education for IT startup developers. This research goes a long
way in exploring the unexplored topic on online behavior of nascent entrepreneurs.
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