Sample Solution

• Private Placement- is the general term for several kinds of stocks or bonds that are sold directly to investors; cannot be resold on the public share market; and are not required to be registered with the regulatory body. A private placement is a method of raising capital with a small group of investors (typically less than 35).

• IPOs- It is the process of making shares of a private company available on the stock market for the general public for the first time. IPOs are forms of stock offerings that let you raise more money by trading in the capital markets.

3.2 What is Crowdfunding

The term “crowdsourcing” was first used by Jeff Howe in 2006 in an online article. It was used to denote a new management philosophy, that is, to solicit funds from an easily approachable “crowd”, or to bring up new ideas, or to appraise opinions. Along similar lines, the term “crowdfunding” was coined by Michael Sullivan in the fall of 2006 when launching a videoblog incubator project.

Crowdfunding as a new-age entrepreneurial phenomenon conveys a generalized recourse to the crowd, in order to replace bureaucratic and traditional fund providers, such as banks, financial markets, venture capitalists, governments, etc.

There have been three key developments which have contributed to the boom and rapid development of crowdfunding, they are as follows: First, there has been a growing tendency of the younger generation to trust their peers, rather than institutions. The rise of the peer-to-peer marketplace is emblematic of this development. New technologies effectively eliminate unnecessary middlemen when it comes to all sorts of financial transactions, establishing direct funding channels between people. Second, there has been a growth in the sharing economy. Collaborative efforts are the hallmark of this phase of business dealings. Crowdfunding is uniquely suited to innovative endeavours. On a fundamental