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Crowdsourcing Vs Crowdfunding

By Urbi Ghosh, 3rd Eye Advisory Ltd
Crowdsourcing Vs Crowdfunding

Many people, even truly the smart ones, even individuals who work in this domain, regularly make wrong use of the words "crowdfunding" and "crowdsourcing".

What actually is the difference between crowdsourcing and crowdfunding?

Crowdsourcing

According to Wikipedia-

The weapon you require to divide and rule is crowdsourcing. It is a modern business term, coined in 2006. Crowdsourcing is basically a technique to outsource particular errands to outer members. Crowdsourcing is highly beneficial in more than one way.


Understand it better with the help of few examples-

  • Wikipedia:
    An extensive group of individuals, who aren't acquainted with each other, contribute with knowledge, information, skills & content to Wikipedia on a regular basis.
  • Quirky:
    A company which is completely bent on producing & selling thoughts/ ideas that are synthesized and then voted on, by the crowd.
  • Waze:
    An app which takes information from the crowd about traffic jams and utilizes it to give directions for the shortest, fastest routes to reach their destinations.
  • '99 Designs' lets you crowdsource your own ideas to create graphic designs.

Crowdsourcing enables you to choose the best outcome from an ocean of 'best entries,' rather than accepting the best entry from a sole supplier.

Now, what is crowdfunding then?

Features of Crowdfunding-

  • Funding of projects/ ventures by raising financial contributions from an extensive group of individuals.
  • Usually executed through internet-mediated registries, but can also be performed through mail-order subscriptions, benefit events, and many such methods.
  • Alternative monetary system as opposed to the conventional finance format.
  • Over $50 million was raised through crowdfunding for President Obama's 2008 election campaign. In place of asking from large donors, Obama requested thousands of his supporters for small contributions.
  • Kickstarter/ Indiegogo: Platforms allowing backers to contribute money in lieu of rewards. Some of the successful Kickstarter Projects include: -
    • Exploding Kittens -
      a card game that raised almost $9 million
    • Pebble Time -
      a smart watch that raised over $20 million
    • Shenmue 3 -
      a computer game that raised over $6 million.

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Article by: Urbi Ghosh, 3rd Eye Advisory Ltd