The Entrepreneurial Impact of Open Data

Sheena Iyengar and  Patrick Bergemann at Opening Governance Research Network: “…To understand how open data is being used to spur innovation and create value, the Governance Lab (GovLab) at NYU Tandon School of Engineering conducted the first ever census of companies that use open data. Using outreach campaigns, expert advice and other sources, they created a database of more than 500 companies founded in the United States called the Open Data 500 (OD500). Among the small and medium enterprises identified that use government data, the most common industries they found are data and technology, followed by finance and investment, business and legal services, and healthcare.

In the context of our collaboration with the GovLab-chaired MacArthur Foundation Research Network on Opening Governance, we sought to dig deeper into the broader impact of open data on entrepreneurship. To do so we combined the OD500 with databases on startup activity from Crunchbase and AngelList. This allowed us to look at the trajectories of open data companies from their founding to the present day. In particular, we compared companies that use open data to similar companies with the same founding year, location and industry to see how well open data companies fare at securing funding along with other indicators of success.

We first looked at the extent to which open data companies have access to investor capital, wondering if open data companies have difficulty gaining funding because their use of public data may be perceived as insufficiently innovative or proprietary. If this is the case, the economic impact of open data may be limited. Instead, we found that open data companies obtain more investors than similar companies that do not use open data. Open data companies have, on average, 1.74 more investors than similar companies founded at the same time. Interestingly, investors in open data companies are not a specific group who specialize in open data startups. Instead, a wide variety of investors put money into these companies. Of the investors who funded open data companies, 59 percent had only invested in one open data company, while 81 percent had invested in one or two. Open data companies appear to be appealing to a wide range of investors….(More)”.