UPSC Previous Year Question | Prelims GS | 2026

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:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer

Correct Answer

Both 1 and 2

Explanation

Crowdfunding involves raising relatively small contributions from a large number of people, generally through an online platform, for a specified project or purpose. It can provide SMEs and other enterprises an alternative source of finance and may reduce some traditional fundraising costs and procedural barriers. Hence both statements are correct.

Topics: crowdfunding, digital finance, economy, msme finance