Which of the following statements about Crowdfunding is/are correct?
- Crowdfunding is solicitation of funds from multiple investors through web-based platforms or social networking sites.
- Small and Medium Enterprises can raise debt and equity capital without rigorous procedures.
Select the answer using the code given below:
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Explanation
Statement 1 is correct
- Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people (the “crowd”). This is typically facilitated through internet-based platforms and social networking sites, which act as intermediaries between the fundraisers and the public.
Statement 2 is correct
- Crowdfunding provides an alternative source of finance for Small and Medium Enterprises (SMEs), often with fewer formalities and lower costs compared to traditional financing methods such as bank loans or public issues.
