UPSC CSE Prelims
Question 81
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:
View correct answer and explanation
Correct answer: C
Correct Option: C
Explanation: Crowdfunding pools contributions from many people through online portals to finance ventures or defined projects and may widen SME access to capital.
Statement-wise Analysis:
Statement 1: Correct - Small contributions gathered via websites or online communities are a standard crowdfunding model.
Statement 2: Correct - Crowdfunding can provide an alternative, potentially lower-cost route for SMEs to obtain financing relative to some traditional channels.
Option-wise Analysis:
A: Incorrect - Omits supported item(s) 2.
B: Incorrect - Omits supported item(s) 1.
C: Correct - This option includes the supported item(s) and excludes the unsupported ones.
D: Incorrect - Omits supported item(s) 1, 2.
Review note: Lower capital cost and exemption from rigorous fundraising procedures are not guaranteed; crowdfunding regulation and securities compliance vary by model.