Seed Funding via Prediction Markets

In our consulting engagements at BitInsight we see clients leveraging the power of prediction markets to assist with resource allocation decisions, typically to support growth. These include allocation of funding to existing product lines, application of resources to evaluate and/or execute acquisitions, and the utilization of capital to support longer term research and development. A great presentation on the application of prediction markets for product development decision support was presented by Christina Ann LaComb from GE at the recent Conference on Corporate Applications of Prediction/Information Markets. A recent post on The Deal.com also noted the application of prediction markets to support acquisition analysis.

An intriguing application of prediction markets, which we have not seen applied to date, is to utilize them to assist the funding of basic research and development outside the context of the enterprise. A recent article in American Scientist titled A Market for Basic Science proposes an interesting mechanism to enable this process. Assuming legal considerations can be addressed, our in-enterprise experience would indicate that this could be a very effective application of a prediction market.