Assignment on Crowd Economy

Submitted To
Dr. Abureza Mohammad Muzareba
Associate Professor
Department Of Marketing
Faculty of Business Studies
University of Dhaka

Submitted By
Abdullah Arafat
Roll No. 625
Section: B
21st Batch
Department of Marketing
Faculty of Business Studies
University of Dhaka
 Crowd Financing
Crowdfunding is the use of small amounts of capital from a large number of individuals to
finance a new business venture. Crowdfunding makes use of the easy accessibility of vast
networks of people through social media and crowdfunding websites to bring investors and
entrepreneurs together, with the potential to increase entrepreneurship by expanding the pool of
investors beyond the traditional circle of owners, relatives and venture capitalists.
The Crowdfunding Centre's May 2014 report identified two primary types of crowdfunding:

1. Rewards crowdfunding: entrepreneurs presell a product or service to launch a business

concept without incurring debt or sacrificing equity/shares.
2. Equity crowdfunding: the backer receives shares of a company, usually in its early stages,
in exchange for the money pledged.
Basics of Crowdfunding
In most jurisdictions, restrictions apply to who can fund a new business and how much they are
allowed to contribute. Similar to the restrictions on hedge fund investing, these regulations are
supposed to protect unsophisticated or non-wealthy investors from putting too much of their
savings at risk. Because so many new businesses fail, their investors face a high risk of losing
their principal.

How Crowdfunding Works

Crowdfunding has created the opportunity for entrepreneurs to raise hundreds of thousands or
millions of dollars from anyone with money to invest. Crowdfunding provides a forum to anyone
with an idea to pitch it in front of waiting investors.

One of the more amusing projects to receive funding was from an individual who wanted to
create a new potato salad recipe. His fundraising goal was $10, but he raised more than $55,000
from 6,911 backers. Investors can select from hundreds of projects and invest as little as $10.
Crowdfunding sites generate revenue from a percentage of the funds raised.

The inputs of the individuals in the crowd trigger the crowdfunding process and influence the
ultimate value of the offerings or outcomes of the process. Each individual acts as an agent of the
offering, selecting and promoting the projects in which they believe. They sometimes play a
donor role oriented towards providing help on social projects. In some cases, they become
shareholders and contribute to the development and growth of the offering. Individuals
disseminate information about projects they support in their online communities, generating
further support (promoters). Motivation for consumer participation stems from the feeling of
being at least partly responsible for the success of others' initiatives (desire for patronage),
striving to be a part of a communal social initiative (desire for social participation), and seeking a
payoff from monetary contributions (desire for investment). Additionally, individuals participate
in crowdfunding to see new and innovative products before the public. Early access often allows
funders to participate more directly in the development of the product. Crowdfunding is also
particularly attractive to funders who are family and friends of a creator. It helps to mediate the
terms of their financial agreement and manage each group's expectations for the project.
Croud Workforce/Sourcing
Crowdsourcing involves obtaining work, information, or opinions from a large group of people
who submit their data via the Internet, social media, and smartphone apps. People involved in
crowdsourcing sometimes work as paid freelancers, while others perform small tasks on a
voluntary basis. For example, traffic apps encourage drivers to report accidents and other
roadway incidents to provide real-time updated information to app users.
Crowdsourcing is a sourcing model in which individuals or organizations obtain goods and
services, including ideas and finances, from a large, relatively open and often rapidly-evolving
group of internet users; it divides work between participants to achieve a cumulative result. The
word crowdsourcing itself is a portmanteau of crowd and outsourcing, and was coined in
2006. As a mode of sourcing, crowdsourcing existed prior to the digital age
Crowdsourcing allows companies to farm out work to people anywhere in the country or around
the world, which lets businesses tap into a vast array of skills and expertise without incurring the
normal overhead costs of in-house employees.

Crowdsourcing is becoming a popular method to raise capital for special projects. As an

alternative to traditional financing options, crowdsourcing taps into the shared interest of a
group, bypassing the conventional gatekeepers and intermediaries required to raise capital

There are major differences between crowdsourcing and outsourcing. Crowdsourcing comes
from a less-specific, more public group, whereas outsourcing is commissioned from a specific,
named group, and includes a mix of bottom-up and top-down processes. Advantages of using
crowdsourcing may include improved costs, speed, quality, flexibility, scalability, or diversity.

Benefits of Crowdsourcing
The advantages of crowdsourcing include cost savings, speed, and the ability to work with
people who have skills that an in-house team may not have. If a task typically takes one
employee a week to perform, a business can cut the turnaround time to a matter of hours by
breaking the job up into many smaller parts and giving those segments to a crowd of workers.

Companies that need some jobs done only on occasions, such as coding or graphic design, can
crowdsource those tasks and avoid the expense of a full-time in-house employee.

Example of Crowdsourcing
Many types of jobs can be crowdsourced, including website creation and transcription.
Companies that want to design new products often turn to the crowd for opinions. Rather than
rely on small focus groups, companies can reach millions of consumers through social media,
ensuring that the business obtains opinions from a variety of cultural and socioeconomic
backgrounds.
 Crowd Service

Crowdservice involves utilising the opinions and discussions of a crowd to boost customer
service and support. In basic terms, it’s customers helping other customers.

The growth of crowdservice coincided with the rapid growth of social media. People’s views,
criticisms and general thoughts on brands and their business model are more plentiful and
accessible than ever before.

Consumers value the wealth of information and opinions provided by other users. Examples of
crowd service include videos on ‘removing an iPhone sim’ or ‘top 10 mobile phones’.

Crowd Service lets you capitalize on the talent within your own business ecosystem and makes it
easy for companies to adjust their workforce to current demands in real-time. Having a larger
available skilled workforce also provides you with the resources you need to accept new business
and clients.  By creating a pool of skilled service technicians consisting of your employees,
subsidiaries, partners, and freelancers, you will always find the perfect person with the right
expertise for the job!