Crowdfunding is defined as:
A. Government subsidy distribution
B. Internet
C. Selling company shares on the stock exchange
D. Taking loans from multiple banks
Answer (2)
Crowdfunding is a method of raising funds by collecting small amounts of money from many people, typically via the internet. It is particularly popular with entrepreneurs looking for financial support for projects or startups. The best answer pertaining to the concept of crowdfunding is therefore ‘B. Internet’.
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Crowdfunding is defined as a way of raising funds for a project or venture by collecting small amounts of money from a large number of people, typically via the Internet. It is not associated with government subsidies, selling company shares on the stock exchange, or taking loans from multiple banks. Instead, crowdfunding uses online platforms to reach a broad audience, allowing individuals to contribute financially to an idea or cause they support.
This method has become increasingly popular over the past decade due to the rise of the Internet and social media, which have made it easier to connect entrepreneurs with potential backers who can support innovative ideas. Crowdfunding is often used for creative projects such as movies, music albums, and new tech inventions, as well as for social causes like disaster relief or fundraising for medical expenses.
There are mainly four types of crowdfunding:
Reward-Based Crowdfunding : Backers receive a tangible item or service in return for their contribution.
Equity Crowdfunding : Investors receive shares in the business or project, giving them a stake in the company's future success.
Donation-Based Crowdfunding : Here, contributors do not expect any financial return; they donate to support a cause they believe in.
Debt Crowdfunding (or Peer-to-Peer Lending) : Contributors loan money with the expectation of being repaid with interest.
Thus, the correct answer to the question is (B) Internet, as crowdfunding heavily involves the use of online platforms to reach potential backers.
