Question

“Crowd Funding and Peer-to-Peer Funding are yet to emerge as major sources of finance”. Explain.

Answer 1

Crowd funding and peer-to-peer funding could be big sources of finance, but they are still developing for various reasons.

• Crowd Funding: It’s about getting small contributions from many people, usually via online sites like Kickstarter or GoFundMe. It has great potential but is still developing because of issues like low awareness, regulations, and the need for effective marketing in a busy digital market.
• Peer-to-Peer Funding: P2P funding links borrowers and lenders online, using platforms like LendingClub or Prosper. It avoids traditional banks but has issues like high credit risk, regulations, and trust problems that prevent its growth.