They've very different models. Crowd funding, as through Kickstarter, is based on potential customers who are willing to pre-purchase a product that doesn't exist yet. Funding is an all-or-nothing proposition for the entrepreneur -- if your product requires $100,000 to develop, but you only get commitments $60,000, you're done and nobody invests a dime. But if you do meet your project's funding goal, those customers put up their money and you go off and develop your product. You retain full ownership of your company, your IP, etc.
The VC model is based on funding a company, not an individual project, although often the company has only one product idea to begin with. But VC's are not potential customers, so the entrepreneur doesn't get that pre-development feedback from the market about how well his product will sell.
And of course in the VC funding model, the VC takes majority ownership of your company.
The crowd funding model is a really innovative way for an entrepreneur or small business to quickly get funding for a new product idea.
Again,...people would only pre-pay for a product under development only when they are convinced with the product idea and the anticipated prospect of the product, right? Then I think it's quite similar to convincing the VC to fund the project, right? Not sure if I have understood the uniqueness in this new approach.
This is an interesting article. I had seen before the web pages talking about the Pebble watch but didn't really draw my attention.
What's really innovative in this new device, is the way they are starting their business. By getting funds from the people who find the product, interesting.
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