Which of the following statements about Crowdfunding is/are correct? 1. Crowdfunding is solicitation

Question

Which of the following statements about Crowdfunding is/are correct? 1. Crowdfunding is solicitation of funds (small amounts) from multiple investors through a web-based platform or social networking site for a specific project. 2. SMEs are able to raise funds at lower cost of capital without undergoing rigorous procedures.

Accepted Answer

Both statements are correct. SEBI defines Crowdfunding as solicitation of funds (usually small amounts) from multiple investors through web-based platforms for a specific project. It provides SMEs and startups an alternative financing route at lower cost of capital without the rigorous procedures, collateral requirements, and compliance associated with traditional bank lending.