The CrowdSourcing model allows the internet masses to partake in any profit or non-profit idea, such as solving problems (crowdsolving), finding lost items (crowdsourcing), or become a source of funds to startup businesses (crowdfunding). The following short ‘work-in-progress’ article looks at the history and growth of crowdsourcing and assesses the value of crowdsourcing in Canada.
CrowdSourcing vs. CrowdFunding
Before we dig deeper into the topic, I want to explain the difference between ‘crowdsourcing’ and ‘crowdfunding’ which are often confused. The good way to differentiate between the two terms is to look at the crowdfunding as a distinct constituent of crowdsourcing that is primarily concerned with finding the small investors to fund the specific project or a whole new startup.
Legalization of CrowdSourcing in Canada
The CrowdSourcing as a contribution sourcing model is a new idea ( a term coined in 2005). The United States signed The Crowdfund Act in 2012, allowing startups to collect money from scores of investors legally. In Canada, we had to wait until 2015 for two legal exemptions to come into effect (NCFA, 2016), namely The Start-Up Crowdfunding Exemption (May 2015) and Integrated Crowdfunding Exemption (January 2016).
CrowdSourcing in Canada
“The Crowdfunding added $65 billion to the global economy in 2014 alone, creating over 270 thousand jobs.” (CrowdExpert.com, 2017). According to Canada Media Fund, crowdsourcing is enormously popular in Canada. With over twenty new projects launched daily, “Canada is one of the leading countries in the world when it comes to setting up a crowdfunding campaign.” (Canada Media Fund, 2016).
Figure 1 – Statistics: Crowdfunding in Canada in 2015 – Canada Media Fund. (2015)
Figure 1 compares the 2014 and 2015 crowdfunding trends in Canada. The number of Canadian crowdfunding projects went down by eight percent (2014 to 2015). However, the total amount raised by crowdfunding in Canada was up by 15% and the Canadian crowdfunding projects collected on average over $20,000 in 2015. The Crowd Data Center (2016) states that Canada is one of the worldwide leaders (Figure 2). In 2016 we ranked overall 3rd with over 1,400 fully funded campaigns, only behind the USA with 17 thousand and U.K. with 4 thousand successfully completed campaigns.
Figure 2 – Statistics: Crowdfunding in Canada in 2016 – The Crowd Data Center (2016)
According to trends observed between 2014-2016; Canadian startup businesses are changing the mindset, moving from regular ways of funding projects (single large investor) to a new shift in thinking, utilizing the new forms of sourcing, the so-called “power of the crowds.” While setting up the project on a crowdsourcing platform with the idea of finding as many small investors as possible seems contradictory to the success of a more traditional way, in Canada alone it has generated crowdsourcing funding worth north of CAD 40 million in 2016 alone (Figure 2).
In conclusion, crowdfunding is the most popular choice among all available forms of crowdsourcing in Canada and quickly becoming and very practical way to generate the necessary startup or project funding.
CrowdFunder (2015). An Overview of Crowdfunding (Infographic). [online] What’s The Big Data? Available at: https://whatsthebigdata.com/2015/04/01/an-overview-of-crowdfunding-infographic/ [Accessed 20 Sep. 2017].
CrowdExpert.com. (2017). Crowdfunding Industry Statistics 2015 2016 – CrowdExpert.com. [online] Available at: http://crowdexpert.com/crowdfunding-industry-statistics/ [Accessed 20 Sep. 2017].
NCFA (2016). Equity Crowdfunding Regulations. [online] Available at: http://ncfacanada.org/equity-crowdfunding-regulations/ [Accessed 20 Sep. 2017].
Canada Media Fund. (2015). Statistics: Crowdfunding in Canada in 2015 [online] Available at: https://crowdfunding.cmf-fmc.ca/facts_and_stats/statistics-crowdfunding-in-canada-in-2015 [Accessed 20 Sep. 2017].
The Crowd Data Center (2016). Statistics: Crowdfunding in Canada in 2016 [online] Available at: http://www.thecrowdfundingcenter.com/data/places?location=CA [Accessed 20 Sep. 2017].