Question

Crowdfunding is an alternative way for start-ups and small/medium companies to raise money. Eligible companies can raise up to how much a year using crowd-sourced funding (so long as they have less than $25 million in assets and annual revenue)

Option 1: $1 million
Option 2: $5 million
Option 3: $10 million
Option 4: $5 million

Answer 1

Eligible companies with less than $25 million in assets and annual revenue can raise up to $1 million annually through crowd-sourced funding. This form of alternative finance complements other channels such as private investments from angel investors and venture capital firms.

Step-by-step explanation:

Crowdfunding is a form of alternative finance that allows start-ups and small/medium-sized enterprises (SMEs) to raise funds from a large number of people, typically via the Internet. It serves as a way for these companies to access early-stage financial capital, which might otherwise be difficult to secure from traditional sources like bank loans, personal savings, or credit cards. In addition to these methods, companies may also seek investment from private investors, such as angel investors and venture capital firms. These investors, while aware of the high-risk nature of investing in startups, are drawn to the potential of high returns, similar to those reaped from early investments in now-dominant companies like Netflix and Amazon.com.

However, the question specifically asks about the limits of crowdfunding for eligible companies, those being businesses with less than $25 million in assets and annual revenue. The answer to the question about how much eligible companies can raise annually using crowd-sourced funding is $1 million.