UC Berkeley Takes Lead in Understanding Crowdfunding Revolution

Crowdfunding is changing the future of finance by fostering the exchange of capital through new technology channels and by providing a more equal playing field for funding investors and recipients. A new partnership at the University of California, Berkeley, now provides a premier hub of education, research, and learning engagement on all topics related to crowdfunding.

Researchers at UC Berkeley’s Haas School of Business and the Fung Institute for Engineering Leadership established CrowdBerkeley for the purpose of better understanding crowdfunding.

Fung Institute engineers have been aggregating databases from global crowdfunding platforms to provide researchers, policy experts, and government agencies with the tools to advance knowledge on technology models and to facilitate innovation and networks in crowdfunding. For example, CrowdBerkeley’s public research will provide evidence of crowdfunding trends such as participant demographics.

Berkeley-Haas faculty and researchers in finance and social enterprise will use the data to study how crowdfunding is impacting traditional financial models and paving the way for innovation and new ventures.

CrowdBerkeley is led by Prof. Lee Fleming, faculty director of the College of Engineering’s Fung Institute for Engineering Leadership; Adair Morse, assistant professor, Berkeley-Haas Finance Group; and Prof. Laura D’Andrea Tyson, director of the Haas School’s Institute for Business and Social Impact (IBSI) as well as Dr. Richard Swart, an internationally recognized thought leader in crowdfunding who has joined IBSI as Scholar in Residence, and Ben Mangan, executive director of the Berkeley-Haas Center for Social Sector Leadership (formerly known as the Center for Nonprofit and Public Leadership).

“The goal of CrowdBerkeley is simple: we aim to leverage the excellence of UC Berkeley to learn, educate, and inform entrepreneurs, policymakers, and researchers on how crowdfunding can shape the economy and society,” says Tyson. “We will pursue this work in a way that reflects the long-standing tradition of the University of California at Berkeley as a university of innovation.”

Crowdfunding got its name from the process of crowds of people investing relatively small amounts of money online to fund new ventures and individuals—bypassing traditional investors and lenders. The growth of crowdfunding continues at a rapid pace, and the practice is expanding to new markets and to new places around the globe each day.

“Berkeley Master of Engineering students have already crowdfunded a startup in the 3D printing space.  Capstone projects have included writing and characterizing classifiers for risk analysis, sponsored by Prosper, a peer-to-peer lending firm in San Francisco,” says Fleming.

CrowdBerkeley enhances an already active study of crowdfunding on campus. Berkeley-Haas has held more than a dozen campus teach-ins where Berkeley academics and students network and collaborate with alumni and industry partners working in crowdfunding. The business school is also redefining finance education by including crowdfunding models, both current and evolving, in the MBA curriculum.

“We care about training our students so they will be best positioned to understand the future of finance from the standpoint of policy, regulation, and tech,” says Morse who teaches the “New Venture Finance” MBA course.

In the course, students learn how to raise equity without traditional investors, create credit and loan models without brick-and-mortar lenders, and understand the implications of new currencies such as Bitcoin, an open source payment network that utilizes technology to conduct peer-to-peer transactions instead of banks to do business.  Berkeley-Haas students have launched several crowdfunding companies, including Indiegogo and WeFinance.

The third annual CrowdBerkeley academic symposium is currently accepting paper submissions on crowdfunding research and will gather academics, practitioners, and policy makers to discuss crowdfunding and crowdfund investing on Sept. 18 to 19, 2015, at UC Berkeley.

The Ewing Marion Kauffman Foundation is the primary sponsor of CrowdBerkeley.

(CrowdBerkeley is not affiliated with Berkeley Crowdfunding, the campus’ crowdfunding platform for Berkeley students, faculty, and staff to launch their own crowdfunding campaigns.)