IEOR Professor Lee Fleming and his collaborators — including alumnus Jason Boada (MEng '15) — were recently featured in the journal Science for their research on crowdfunding. The research shows that when a region of the U.S. has successful crowdfunding campaigns (e.g. on Kickstarter), it tends to be followed by an increase in venture capital in that particular region. This is exciting news for entrepreneurs who do not live in Silicon Valley or Boston, where almost all venture capital is currently invested in the U.S. Further, the research shows that not only does venture capital investment follow crowdfunding success, but that the effect has grown stronger over the past six years.
Unlike venture capital investment, crowdfunding is more evenly distributed across the country, with no real preference for either Silicon Valley or Boston. So, if the trend continues, it may help address some of the regional inequalities in entrepreneurial financing by inducing venture capitalists to look for new opportunities in non-traditional regions.
The research started as a Master of Engineering capstone project led by IEOR student Jason Boada. Boada used web-scraping tools to gather data from Kickstarter and other crowdfunding platforms to support the CrowdBerkeley initiative by giving researchers access to a large dataset to help them work to understand crowdfunding.
Besides Boada, Fleming also collaborated with Professor Olav Sorenson and PhD student Valentina Assenova at Yale University, as well as Guan-Cheng Li, a researcher at UC Berkeley.