Success Factors in Reward based and Equity based Crowdfunding in Finland

Master’s Thesis 
11 
2.2. Defining Crowdfunding 
Crowdfunding is a concept closely related to and originating from the broader concept 
of crowdsourcing
(Gerber and Hui, 2013)
. The term crowdsourcing is in its infancy 
and undergoing constant evolution. If can be described as a form of co-creation or 
collaborative activity. Eight aspects come to play in each crowdsourcing initiative 
(
Estellés-Aroles and Gonzáles-Ladrón-de-Guevara, 2012)
:
- The crowd (people who are contributing to the venture) 
- The task at hand (the venture requiring crowd input) 
- The recompense obtained (the type of input obtained from the crowd) 
- The crowdsourcer (the creator initiating the sourcing of input from the crowd) 
- The goal of the process (the aim of gaining a certain type of crowd input) 
- The type of process (the method of obtaining input) 
- The call to participate (the act of requesting input) 
- The medium (the channel through which the crowd provides their input) 
These are the aspects common to all crowdfunding initiatives. In order to have a more 
precise definition, each aspect has to be defined (
Estellés-Aroles and Gonzáles-
Ladrón-de-Guevara, 2012)
. In the case of crowdfunding the task at hand would be 
defined as “raising money”. 
The term crowdfunding was coined by Michael Sullivan in 2006 when he launched 
his crowdfunding website
(Lasrado and Lugmayr, 2013)
. It is a new and emerging 
type of funding option (Larralde and Schwienbacher, 2010). Consequently, the aca-
demic literature regarding crowdfunding is still limited (
Estellés-Aroles and Gonzá-
les-Ladrón-de-Guevara, 2012; Giudici et al., 2013). 
Crowdfunding has been defined in several different ways in literature. The common-
ality between almost all definitions is that the initiative aims to raise financial capital 
from a large group of people often utilizing the Internet. In Table 1 the author has 
collected four crowdfunding definitions form recent academic literature. These defini-
tions were chosen, because they are relatively recent and have been highly cited in 
academic literature, which speaks for their relevance to the topic of crowdfunding. 
The author felt that providing four separate definitions would showcase how the term 

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