Canadian Securities Course (CSC) Level 1 Practice Exam

What is crowdfunding?

1. Authentic foundation.

2. Investment in public infrastructure.

3. The process of raising start-up capital from the public.

4. Government grants for small businesses.

The correct answer is: The process of raising start-up capital from the public.

Crowdfunding refers to the practice of collecting funds from a large number of people, usually via the internet, to finance a new business venture or project. This method allows individual investors to contribute small amounts of money, which collectively provide the necessary capital for startups and entrepreneurial projects that may not qualify for traditional funding methods. Crowdfunding harnesses the power of community and often includes various platforms where these projects are presented to potential backers. Funding through crowdfunding can also come with different rewards or equity stakes depending on the structure of the campaign, making it appealing for both creators and investors. It plays a significant role in the modern entrepreneurial landscape, facilitating innovation by allowing ideas to materialize even with limited initial financing. While the other options address financial support mechanisms, they do not capture the essence of crowdfunding as effectively as the selected answer. Authentic foundations may refer to legitimate organizations, investment in public infrastructure typically involves large-scale government or institutional financing, and government grants are specific financial aids that do not involve raising capital from a broad public base.