Which of the following statements about Crowdfunding is/are correct?
- Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project.
- Small and Medium Enterprises (SMEs) are able to raise funds at lower cost of capital without undergoing rigorous procedures.
Select the answer using the code given below:
Correct answer: C
Explanation
Crowdfunding pools small contributions from a large number of investors via web-based platforms or social networks to fund a specific venture or project (1 correct) — SEBI's 2014 consultation paper uses exactly this definition. For SMEs it offers an alternative to bank credit and IPOs, lowering the cost of capital and avoiding rigorous listing and collateral procedures (2 correct). Both statements are valid descriptions of the model.