Using Crowdfunding Data to Predict Venture Capital Investments and City Innovation

Short thesis

This talk will show how crowdfunding data can be used to predict venture capital investments, how the creative and cultural space of a city can be measured, and -as a cookie for creators and crowdfunders- which types of projects and creators are more successful.


Prediction is very difficult, especially if it’s about the future. - Niels Bohr

Since its inception in 2009, the crowdfunding platform Kickstarter successfully attributed  $1.9b to new product creation. Essentially, this capital contributed to anything from media and art related projects up to completely new innovations in the field of potato salad, virtual reality, IoT and 3D-printing.

Crowdfunding is the new kid on the block in financing ideas. Unlike traditional financial vehicles such as bank loans, seed, angel or later stage venture capital (“VC”), crowdfunding allows individuals to fund innovation within a wide range of capital supply. The amount can vary from a few dollars for a pottery project to a new smart watch for $20 million in crowd-capital. "The wisdom of the crowd" is present where it enables the satisfaction of market demands that remained untapped. Such a system has three advantages: (1) The creator gets funded to be creative, independently from his location (2) the crowd gets a new product and (3) people like the presenter get data to run some sexy regressions. Win-Win-Win.

This talk will present how crowdfunding data can be used to predict venture capital investments and why crowdfunding may potentially crowd out venture capital within a specific funding range. It will also be highlighted how crowdfunding activity aligns with Google Trends and reddit search queries. Using methods from network science, the presentation will continue to show a city's cultural and creative complexity ("Innovation Space") and how such data could be used to improve local development initiatives. Closing the talk, attending creators and funders will be equipped with entertaining scientific knowledge on "What makes a crowdfunding campaign successful?", based on most recent experimental studies.