Which of the following statements about Crowdfunding is/are correct ?
- 1.Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project.
- 2.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 :
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Answer: C. Statement 1 is correct: SEBI describes crowdfunding as raising small amounts from many investors through a web platform or social network for a specific project. Statement 2 is correct: it lets SMEs and start-ups raise money cheaply without the heavy procedures of a public issue. So both.
Watch for: Students know SEBI has not allowed equity crowdfunding and wrongly reject the general description.
Why the other options are wrong
- A. Wrong because statement 2 is also correct.
- B. Wrong because statement 1 is also correct.
- D. Wrong because both match SEBI's description.
Source to check: SEBI Consultation Paper on Crowdfunding in India (June 2014), sebi.gov.in
Answer from the provisional UPSC key; it may change when the final key is out. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.