Crowdfunding is defined as funding a business by raising many small amounts of money from a large number of people.

Crowdfunding is defined as funding a business by raising many small amounts of money from a large number of people.

• A. Funding a business by raising one large investment from a single investor
• B. Funding a business by borrowing from a bank
• C. Funding a business by receiving grants from government agencies
• D. Funding a business by raising many small amounts of money from a large number of people

Answer: (D)

Crowdfunding works by pooling small contributions from a broad group of supporters to fund a venture. This is why the statement is the best fit: the essence of crowdfunding is that many people each give a little, and together their funds add up to support the business. It’s different from getting a single large investment from one investor, borrowing from a bank, or receiving a government grant, all of which involve funding from a much smaller number of sources or different financing mechanisms. In crowdfunding, platforms usually facilitate the process and help validate demand, with contributions that can be in the form of rewards, donations, debt, or equity depending on the campaign.

Crowdfunding works by pooling small contributions from a broad group of supporters to fund a venture. This is why the statement is the best fit: the essence of crowdfunding is that many people each give a little, and together their funds add up to support the business. It’s different from getting a single large investment from one investor, borrowing from a bank, or receiving a government grant, all of which involve funding from a much smaller number of sources or different financing mechanisms. In crowdfunding, platforms usually facilitate the process and help validate demand, with contributions that can be in the form of rewards, donations, debt, or equity depending on the campaign.