Expand innovation finance via crowdfunding

That CF has been funding innovators in a large number of places that have typically been excluded from venture capitalists, and has been expanding the geographic reach of VC itself

Olav Sorenson

2016

Scholarcy highlights

  • Crowdfunding platforms, such as Kickstarter, offer a means of funding innovation, connecting inventors and entrepreneurs with a multitude of supporters, who each provide a small fraction of the amount required to fund the project
  • Considerable funding for innovation has historically come from venture capitalists, the entrepreneurs funded by VCs often mirror the investors in terms of their educational, social, and professional characteristics and end up concentrated in a small number of regions
  • That CF has been funding innovators in a large number of places that have typically been excluded from VC, and has been expanding the geographic reach of VC itself
  • Efect of 1% increase in KS activity on VC activity ficulties in juxtaposing these two sources of funding comes from the fact that many people run KS campaigns for projects that have no real possibility of being backed by VC, such as the creation of artwork, music, and dance
  • Our analyses focused on the numbers of successful KS campaigns and VC investments rather than dollar amounts, because these better reflect the number of innovations funded
  • The 2009 estimates for the overall number of campaigns and successful campaigns do not differ significantly from zero, by 2010, a 1% increase in the number of successful matched KS campaigns in 1 year predicted a more than 0.10%
  • We estimated the effects for each year to explore whether the importance of KS in attracting future VC investments has been changing over time
  • These regressions suggest that the importance of successful KS to venture capitalists investments in a region has been rising over time

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