“Highly catalytic news and events…….are increasingly benefiting from improvements in the quality of filtering, contextualizing, and sentiment scoring that text analytics are now bringing to the table.” – Paul Rowady, “Inner Voices”
By its very nature, Crowdfunding defines the potential of Big Data. Those participating in such platforms rely on building social networks to identify investment opportunities, conduct due diligence, and keep informed of investments over time. All of these activities generate massive of amounts of sentiment data or indications of positive, negative, or neutral feelings towards a particular topic. By tagging this data (i.e., Metadata) and applying scoring algorithms, Crowdfunding platforms generate a guidepost for investment decisions.
Within this wave of innovation resides an engine fueling capital market efficiencies similar to the proliferation/impact of decimalized trading in the public markets, and it’s called “Text Analytics.” This term, often used in concert with “Data Mining,” refers to leveraging technology to identify patterns in unstructured content (i.e., social media), measuring meaning behind data (contextualization/sentiment analysis), and making the data productive via tagging/matching (i.e., buyer investment preferences to deal flow).
Why is sentiment analysis important? It has the potential to assist investors with making better decisions, leading to higher investment returns and subsequently more capital reinvested in the space.
Personalization of data or “getting the right information to the right person in the right place at the right time and in the right format” will be the future of the capital markets and Crowdfunding will play a major role in that transformation.