ITPEC IP April 2025 Question 91
Crowdfunding can be classified into loan-based, donation-based, purchase-based, or investment-based types, depending on the form of funding and the way the compensation is paid. In order to start a new business, Company A has decided to raise funds through crowdfunding and pay a part of the profits to the funders as dividends. Which of the following is the most appropriate type of crowdfunding used by Company A?
Explanation
Investment-based crowdfunding — the funders receive part of the new business's profits as dividends.
Crowdfunding raises money from many unspecified people over the Internet, and its types differ in what the funders get back:
Company A pays part of its profits to the funders as dividends, so the funders are investors.
Answer (d)
Why not others:
- •(a) Loan-based — funders are repaid the principal with agreed interest whether or not the business makes a profit
- •(b) Donation-based — funders support a cause and receive no financial return
- •(c) Purchase-based — funders are rewarded with the product or service, such as the first units of a new gadget, not with a share of profits
Key rule: Classify crowdfunding by the return: interest means loan, nothing means donation, a product means purchase, a share of profits means investment.
Business Industry · AI-written, may contain errors
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