Difference between crowdfunding and crowdsourcing

There’s one major similarity between crowdfunding and crowdsourcing: both use mass collaboration to get stuff done. Both systems offer innovative ways of sourcing funding and fuelling growth in a business but each is different in a number of ways. Working out the difference between crowdfunding and crowdsourcing will help you understand which is right for the endeavour you’re about to embark on.


The basic thing to understand here is that this method solves a lot of your obvious distribution problems. In order to operate successfully businesses work out what microtasks need to be achieved so they can reach their financial and business goals. When you’re talking about web content that spreads the firm’s message, you need a lot of creative input to get your brand out there. With Crowdsourcing a firm has at its finger tips an on-demand workforce that can tackle any project. The five major benefits are –

  • 1. Access to a flexible workforce
  • 2. Broad access to creative talent
  • 3. Increased cost-effectiveness
  • 4. Increased business capabilities
  • 5. Reduced time to market and faster project delivery


As with Crowdsourcing, you’ll have the power of the group behind you but the big difference here is that rather than handling microtasks, the crowd offers a source of funding. This basically means that if you have a business idea, you could get the crowd to fund it with donations or through pre-purchasing your product. It’s important to understand that Crowdfunding doesn’t get you investors so you won’t be giving away any percentage of your firm. Start-up firms, artists, service providers and those looking to help with disaster relief have all used this form of funding to help their endeavours. Crowdfunding platforms like kickstarter.com are the best place to look if you’re interested in using the power of the crowd to help fund your next venture. The five advantages of this system are –

  • 1. Access to capital with hedged risk
  • 2. Works as a marketing tool
  • 3. Provides easier source of funding than traditional channels
  • 4. Introduces potential loyal customers
  • 5. Develops free PR and an opportunity for advance sales

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