Startup Crowdsourcing vs. Crowdfunding | Key Differences

Benjamin Debonneville
Founder & CEO
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Crowdsourcing and crowdfunding are like two sides of the same coin, harnessing the power of many to achieve what one alone cannot. They might sound similar, but they're quite different. Crowdsourcing gathers collective wisdom and skills while crowdfunding pools together financial resources.

Both strategies are vital for startups, offering innovative ways to grow and compete. Often mixed up, these concepts are distinct yet equally powerful. They turn to the audience for a boost, be it ideas or funding, making them crucial for businesses aiming to stay ahead.

In this guide we'll explore, what these concepts are, how they differ, and benefit startups in their growth.

What is Startup Crowdsourcing?

Crowdsourcing is a smart way for startups to get big ideas and solutions. It's like asking a bunch of smart people from all over the world to share their thoughts, skills, or help on a project. This method lets businesses gather unique ideas, skills, and inputs quickly and creatively.

Moreover, crowdsourcing is not about asking for money, but about getting knowledge, ideas, or work from a large crowd through the internet and apps. This approach can speed up growth and bring in fresh perspectives.

Key Features of Crowdsourcing:

  • Taps into Large Crowds: Crowdsourcing means a lot of people, each with their own skills and ideas, come together to help out. It's like having a huge team at your fingertips.
  • Fosters New Ideas: By reaching out to many, crowdsourcing brings in fresh ideas. This could be for new products, services, or ways to do things differently.
  • Seeks Direct Input: When you use crowdsourcing, you're directly asking a crowd for their thoughts and solutions. It's like having a big brainstorming session with people from all over the world.
  • No Money Involved: Unlike crowdfunding, crowdsourcing isn't about getting money. It's about getting help, advice, and services.

Examples of Crowdsourcing for Startups:

  • Product Development Feedback: Startups can use social media or dedicated platforms to gather feedback on product development, similar to how Kickstarter projects often evolve based on backer input.
  • Technology Solutions: For tech startups, using GitHub to crowdsource solutions for software development challenges is a common practice, harnessing the collective expertise of developers worldwide.
  • Content Creation: Startups may use platforms like Upwork to crowdsource content creation, where freelance writers and creators contribute to projects like blog posts or marketing materials.
  • Market Research: Engaging online communities in surveys or discussions for market research is a form of crowdsourcing that helps startups understand customer preferences and industry trends.

What is Startup Crowdfunding?

Crowdfunding is like a big group of people chipping in money to help bring your startup's idea to life. It's done online, where people who believe in your idea give small amounts of money.

This not only helps raise funds but also builds a community that believes in what you're doing. It's great for testing your idea without needing a lot of money upfront.

Crowdfunding is especially helpful for small businesses that find it tough to get money from banks. It's about sharing your dream online and getting people excited enough to back you up with their own money.

Types of Crowdfunding:

The following are the four main types of startup crowdfunding:

  1. Donation-Based: People give money to support a cause they care about, without expecting anything in return. It's all about helping out.
  2. Equity-Based: Investors get a piece of your company in exchange for their money. They become part-owners and share in your success.
  3. Lending-Based (P2P): People lend money to your business, and you pay them back with interest. It's like getting a loan from many people.
  4. Rewards-Based: People give money and get rewards in return, like early access to your product or special treats.

Top Crowdfunding Online Platforms for Early Startups:

Early founders have several excellent online platforms for crowdfunding. Here are the top choices:

  • Kickstarter: The go-to for creative projects since 2009, with over $6.6 billion pledged. Miss your goal? Backers get refunded.
  • Indiegogo: Known for flexibility in funding and showcasing innovative products. Miss your goal? You still keep what's raised.
  • Patreon: A hub for creatives seeking ongoing support through monthly subscriptions, offering exclusive content to their supporters.
  • GoFundMe: Ideal for personal causes and service-based businesses, it’s raised over $15 billion for various heartfelt needs.
  • SeedInvest Technology: A platform for startups, connecting them with a large community of investors, with no fees for unmet goals.

Crowdsourcing vs. Crowdfunding: Decoding Key Differences

Crowdsourcing and crowdfunding both involve the crowd but in different ways. Let's explore how they are not the same:

1. Purpose and Focus:

  • Crowdfunding is all about getting money for a specific project or idea. People give funds to help make these ideas happen.
  • Crowdsourcing is used for gathering ideas, solutions, or skills from many people. It's like asking a big group for their smartest thoughts and help.

2. Target Audience and Participants:

  • Crowdfunding attracts people who want to support projects with money. These supporters can be anyone who believes in the idea.
  • Crowdsourcing looks for people with specific skills or knowledge. These contributors share their expertise or ideas, not money.

3. Outcome and Deliverables:

  • Crowdfunding results in gathering funds to bring a project to life. The focus is on getting enough money to start or finish something.
  • Crowdsourcing leads to a collection of ideas or completed tasks. It's about getting creative solutions or work done, not just funds.

4. Approach

  • Crowdfunding uses online platforms where people can donate to projects. It’s more about telling a story and convincing people to give money.
  • Crowdsourcing involves asking for ideas or help, like through surveys or competitions. It's about collaboration and using collective intelligence.

5. End Objectives

  • Crowdfunding aims to raise a certain amount of money for a cause or project. The focus is on reaching a financial goal.
  • Crowdsourcing seeks to discover new information or solve problems. It’s more about gathering diverse inputs than money.

6. Participant's Role

  • In Crowdfunding, participants are more like backers or donors. They give money and watch the project grow.
  • In Crowdsourcing, participants are active contributors. They share their skills or knowledge to help create or improve something.

7. Event Duration

  • Crowdfunding campaigns usually have a set timeline. They run for a specific period to reach a funding goal.
  • Crowdsourcing can be ongoing. It’s not limited to a timeframe and can continue as long as ideas and contributions are needed.

Key Benefits of Crowdsourcing for Startups

Crowdsourcing is like asking a big group of smart friends to help your startup grow. It’s about getting great ideas and work from many people.

Key Benefits of Crowdsourcing for Startups:

  • Quicker Solutions: Crowdsourcing means getting things done faster. Many people work together on your idea, so it gets ready quicker than doing it alone.
  • Diverse Skill Sets: You get to work with people who are really good at different things. This makes your project better and saves time.
  • Marketing Potential: People who help with your project are likely to talk about it to others. They become fans who spread the word about your brand.
  • Cost-Effective Solutions: Crowdsourcing can be cheaper than hiring full-time people. You only pay for the help you need, when you need it.
  • Increased Business Capabilities: By using ideas from many people, your business can do new and exciting things that you might not have thought of before.
  • Faster Project Delivery: With lots of people working on small parts, your project gets done faster. This helps when you have a big job to do.
  • Generating Marketing Buzz: When you involve people in making something, they get excited and tell others. This helps more people learn about your product or service.
  • Creative Ideas and Innovation: Having lots of people think about your project means more creativity and new ideas. It’s like a giant brainstorming session!

Key Benefits of Crowdfunding

Crowdfunding is perfect for early-stage startups, offering crucial support, funding, and validation right from the start.

Key Benefits of Crowdfunding for Startups:

  • Capital Access: Crowdfunding is a fast track to money land. You can gather funds much quicker than traditional ways, like bank loans or investor meetings.
  • Early Adopters and Feedback: Those who support your idea early on are like test pilots. They can try your product, give feedback, and help make it better before the big launch.
  • Capital with Less Risk: Crowdfunding lets you raise money without the stress of bank loans or giving away parts of your business. It's like getting funds with fewer strings attached.
  • Building a Community: When people back your project, they become part of your startup's family. They're likely to stick around, follow your journey, and cheer you on.
  • Diverse Funding Sources: Crowdfunding opens doors to money from all sorts of people – friends, family, fans, and even strangers who believe in your idea.
  • Innovation and Creativity Support: Crowdfunding is perfect for out-of-the-box ideas. It's a place where creative and unique projects can find love and support.


Crowdfunding and crowdsourcing are two powerful engines that can propel a startup to great heights. Crowdsourcing is all about getting smart ideas and help from lots of people, while crowdfunding is like a big piggy bank, filled by supporters who believe in your dream.

Together, they're a powerful combo, turning your bright ideas into reality and giving your startup the wings it needs to fly high.  For any startup looking to make a mark, embracing these two concepts at the early stage greatly benefits it to success.

Benjamin gave great tips to my start-up Blend for polishing and optimising my pitch deck, refreshing perspective. Recommend!