County-level distributions of Kickstarter campaigns and venture capital investments, and the ratio of the amount of Kickstarter to venture capital funding, 2009’2015. Increasing blue to red indicates a higher ratio of Kickstarter to venture capital funding. (Graphic by J. YOU/Science)
Crowdfunding platforms, such as Kickstarter, have opened a funding spigot to startups in regions that have suffered from a venture capital drought, a new UC Berkeley study shows. Historically, funding for innovation has come from venture capitalists, which tend to fund entrepreneurs that often mirror the investors in terms of their educational, social and professional characteristics. Venture capital funding also tends to be concentrated in a small number of regions, such as Silicon Valley. The study found that crowdfunding has spread startup financing beyond these entrepreneurial bubbles. 'Most venture capital gets invested in Silicon Valley and Boston, and thus shortchanges the rest of the country for entrepreneurial financing,' said study senior author Lee Fleming, faculty director of the Coleman Fung Institute for Engineering Leadership at UC Berkeley. 'But crowdfunding has opened up funding to everyone else.' The article was published in a recent edition of the journal Science . For the study, researchers analyzed data from 2009 to 2015 on successful Kickstarter campaigns and venture capital investments.
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