financing since the company will not have to repay its shareholders. Investors usually look at the long term without expecting a short-term return on their investment. It enables the company to... Read More
Category: Finance & Investment
Advantages of Equity Financing 1: Alternative source of funding The primary benefit of equity financing is that it provides a source of alternative funding to debt for companies. Small start-ups that... Read More
5. Initial public offerings (IPOs) Companies that are quite well-established can raise finance with an initial public offering, or IPO. IPO is a method of raising finance where companies allow its... Read More
4. Corporate investors Corporate investors are large companies which invest in private companies to provide the needed funding. The investment is usually created for the purpose of establishing a strategic partnership... Read More
3. Venture capital firms These are firms that make investments in businesses they believe will grow fast and appear on stock exchanges later. They invest a larger sum of money into... Read More
2. Crowdfunding platforms Crowdfunding platforms allow many people in the public to invest in the company in small amounts. Members of the public decide to invest in the companies because they... Read More
Angel investors are rich people who buy stakes in businesses they believe have a potential to give higher returns in the future. The individuals usually bring their business skills, experience,... Read More
Equity financing is especially important during a company's startup stage to finance plant assets and initial operating expenses. Investors make gains by receiving dividends or when their shares increase in... Read More
After all, if equity financing can be effective for growth, then its valuation impact will only depend upon how well the company employs the capital, manages the investor relations, and... Read More
However, the drawbacks are the dilution of ownership, potential misalignment of goals with investors, and pressure to meet market expectations. The valuation set during an equity financing round also has... Read More