Q62·GS Paper 1 · Prelims 2026

Crowdfunding Principles

EconomyFinancial Markets & InstrumentsStatement-based● EasyStatic

Question

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

1Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project.

2Small 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 :

Options

1 only

2 only

Both 1 and 2

Answer

Neither 1 nor 2

Explanation

Both statements are correct. Crowdfunding is a financing mechanism that aggregates small capital contributions from a large pool of distributed individuals via digital platforms for a designated venture or cause. Statement 2 is correct because it offers an alternative to traditional, complex banking channels or public listing processes, enabling start-ups and SMEs to secure flexible capital efficiently and often at a lower aggregate cost.