ACCA Strategic Business Reporting (SBR) Practice Exam

The four main types of crowdfunding are indeed equity-based, debt-based, reward-based, and donation-based.

Equity-based crowdfunding allows individuals to invest in a company in exchange for shares, providing them with ownership stakes and potential dividends. This model appeals to startups and growth-stage companies seeking capital without incurring debt.

Debt-based crowdfunding, on the other hand, involves borrowing money from individual investors, which must be repaid with interest. This type is attractive for businesses looking for loans but allows them to access capital outside of traditional banks.

Reward-based crowdfunding involves funding a project or venture in exchange for non-monetary rewards, such as products, services, or experiences. This method is popular among creators and entrepreneurs who want to gauge interest and secure funding before launching their projects.

Donation-based crowdfunding is typically used for charitable causes, where contributors provide funds without expecting any return or reward, emphasizing the altruistic aspect of raising money for community projects or social causes.

In contrast, other options include variations of crowdfunding terms but do not accurately reflect the four primary methods recognized in standard crowdfunding classifications. This discrepancy highlights the importance of understanding the established categories in the context of strategic reporting and financing options.