What is Crowdfunding?
Crowdfunding is an emerging alternative source of financing. It refers to open calls to the public, generally via internet, to finance a project through either a donation, a monetary contribution in exchange for a reward, product pre-ordering, lending, or investment.
Any type of project can launch a crowdfunding campaign: SMEs, artists, innovative start-ups, social entrepreneurs may all benefit from different forms of crowdfunding. Crowdfunding – this alternative form of fundraising that is collective, participatory and interactive – is becoming increasingly important. It has the potential to bridge the financing gap many start-ups face and to stimulate entrepreneurship.
What is Crowdsourcing
Crowdsourcing is the process of obtaining needed services, ideas, or content by soliciting contributions from a large group of people, and especially from an online community.
Jeff Howe and Mark Robinson, editors at Wired Magazine, coined the term "crowdsourcing" in 2005 after conversations about how businesses were using the Internet to outsource work to individuals. Howe and Robinson came to the conclusion that what was happening was like "outsourcing to the crowd," which quickly led to the portmanteau "crowdsourcing." Howe first published a definition for the term "crowdsourcing" in a companion blog post to his June 2006 Wired magazine article, "The Rise of Crowdsourcing," which came out in print just days later:
"Simply defined, crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call. This can take the form of peer-production (when the job is performed collaboratively), but is also often undertaken by sole individuals. The crucial prerequisite is the use of the open call format and the large network of potential laborers."
After studying more than 40 definitions of crowdsourcing in the scientific and popular literature, Enrique Estellés-Arolas and Fernando González Ladrón-de-Guevara, researchers at the Technical University of Valencia, developed a new integrating definition:
"Crowdsourcing is a type of participative online activity in which an individual, an institution, a non-profit organization, or company proposes to a group of individuals of varying knowledge, heterogeneity, and number, via a flexible open call, the voluntary undertaking of a task. The undertaking of the task, of variable complexity and modularity, and in which the crowd should participate bringing their work, money, knowledge and/or experience, always entails mutual benefit. The user will receive the satisfaction of a given type of need, be it economic, social recognition, self-esteem, or the development of individual skills, while the crowdsourcer will obtain and utilize to their advantage that which the user has brought to the venture, whose form will depend on the type of activity undertaken".
Henk van Ess, a college lecturer in online communications, emphasizes the need to "give back" the crowdsourced results to the public on ethical grounds. His non-scientific, non-commercial definition is widely cited in the popular press:
"Crowdsourcing is channeling the experts’ desire to solve a problem and then freely sharing the answer with everyone."