Crowdfunding vs crowdsourcing : what differences?
Today, we’re going to dive into the exciting world of participatory innovation and new forms of financing. Crowdfunding and crowdsourcing are two terms that come up a lot in business news. But what exactly is the difference between these two concepts? That’s the question we’re going to try and answer.
First and foremost, don’t forget that you can create your own crowdfunding campaign here 👇
Key learnings from this article
Crowdfunding is a call for participatory funding, while crowdsourcing is a call for ideas! Find out more about the best crowdfunding platforms in Canada.
Crowdfunding: a new form of financing for businesses
Definition
It’s high time to clarify the concept of crowdfunding.
To put it simply, it’s a financing method that enables companies to raise funds from the “crowd”, i.e. individuals or potential customers.
Crowdfunding platforms offer companies the opportunity to present their creation or development project to a wide audience.
Participants can then contribute financially to the project, often in exchange for rewards or equity stakes in the company (equity crowdfunding).
Crowdfunding is therefore an interesting alternative for companies struggling to obtain traditional financing. It can also be used to test the market appeal of a new product or service, and to generate a buzz around the project.
The best crowdfunding platforms in Canada
| Platform | Description | Domain |
|---|---|---|
| Tiing | Online crowdfunding platform offering a comprehensive and user-friendly solution in Canada. | General |
| Kickstarter | International crowdfunding platform for creative projects. | Creative |
| Indiegogo | Global crowdfunding platform supporting various projects, including innovations. | General |
| GoFundMe | Primary fundraising platform for personal and community causes. | Personal/Community |
| FrontFundr | Crowdfunding platform for investments in startups. | Investment |
| Patreon | Specialized in funding content creators by their fans. | Creative |
| Ulule | European crowdfunding platform present in Canada, focused on creative projects. | Cre |
Crowdsourcing: the power of the crowd
Definition
Crowdsourcing is another concept that allows companies to call on the “crowd” for ideas, skills or solutions.
In concrete terms, a company can launch a call for ideas on a crowdsourcing platform to:
- solving a problem
- or develop a new product.
Participants can then propose their ideas, which are then evaluated by the company.
Crowdsourcing offers many advantages to companies. It lets you benefit from the creativity and expertise of the crowd, stimulates innovation, and creates a strong bond with the community of customers or users.
The best crowdsourcing platforms in Canada
| Platform | Description | Domain |
|---|---|---|
| Idea Bounty | Assists in evolving ideas by soliciting the community for suggestions. Payment only for the best idea. | Generic Ideas |
| OpenIDEO | Platform focused on idea development, fostering collaboration for philanthropic and general interest projects. | Philanthropic Ideas |
| Innocentive | Connects individual or group researchers to solve problems, with a wide variety of participants. | Problem Solving |
| CrowdSpring | Connects with designers for projects starting from $7. Preferred design selection with payment only for the chosen design. | Graphic Design |
| 99Designs | Artistic platform focusing on graphic modeling. Creates contests for over a million professionals. | Graphic Modeling |
| Cad Crowd | Specialized in 3D modeling and 3D printing. Contests are launched, but hiring the winner can be done more traditionally. | 3D Modeling |
| DesignCrowd | Enables searching for designers by specialty. Designer statistics are rated, and the price of their services increases with their qualities. | Graphic Design |
| MicroWorkers | Intended for simple micro-tasks requiring a few minutes of work. Various tasks such as completing surveys or signing up on sites. | Various Tasks |
| Mechanical Turk (mTurk) | Managed by Amazon, allows requesting simple “Human Intelligence Tasks” like answering surveys or commenting on blogs. | Various Tasks |
| crowdSPRING | Allows obtaining over 100 entries for a single project. | Various Tasks |
| oDesk.com | Assists in finding diverse talents, from web developers to translators. Allows staying in touch with appreciated talents. | Various Tasks |
| Elance | Offers a wide range of talents, from mobile app designers to content writers. The platform allows posting job offers and requesting interviews. | Various Tasks |
The advantages of crowdfunding for the project owner
Before diving into the details, it’s worth remembering that participatory financing, or crowdfunding, is a solution that offers many advantages to entrepreneurs and innovators. First of all, the crowdfunding financing platform enables project carriers to raise funds much more easily than through traditional means, such as bank loans or venture capital.
With platforms like Kickstarter, Indiegogo and GoFundMe, it’s possible to solicit contributions from the crowd, often in exchange for rewards.
The process is generally simple and transparent, making it easy for potential contributors to get involved. But that’s not all. Crowdfunding also has the advantage of creating a buzz around products services, which can lead to increased visibility on social networks and stronger customer engagement. It’s a powerful marketing tool that can help promote a brand or product even before it’s launched.
Finally, in equity crowdfunding, contributors become shareholders in the company. This can create a strong bond between the company and its customers, who now have a direct financial stake in the company’s success.
The benefits of crowdsourcing to drive innovation
Crowdsourcing is a method that may seem a little confusing at first, but it offers considerable benefits for innovation. Crowdsourcing, also known as open innovation, is a process whereby a company calls on the crowd to obtain:
- ideas,
- skills
- or solutions
It’s a powerful way of stimulating innovation and creativity. Companies can launch a call for ideas on a crowdsourcing platform, then analyze the data to determine which are the most promising.
The marketing manager or project leader can then use these ideas to develop new products, services or improve existing ones.
What’s more, crowdsourcing enables a company to tap into the expertise and insight of a diverse crowd, rather than relying solely on its in-house team.
Crowdfunding + crowdsourcing : assemble!
By combining crowdfunding and crowdsourcing, companies can leverage the crowd for both crowdfunding and innovation.
Imagine a company launching a crowdfunding campaign to finance the development of a new product.
At the same time, it could use crowdsourcing to gather ideas on product design, pricing, distribution and so on. This participatory approach to financing and product creation can lead to impressive results.
Not only does it raise funds, but it also provides valuable feedback from customers, which can help improve the product and increase its chances of success on the market.
