BUSI 2401U Chapter 14: Raising Equity Capital
Document Summary
Sources of funding: a private company can seek funding from several potential sources: Individual investors who buy equity in small private firms. The first round of outside private equity financing is often obtained from angels: venture capital firms. Specialize in raising money to invest in the private equity of young firms. In return, venture capitalists often demand a great deal of control of the company: institutional investors. Pension funds, insurance companies, endowments, and foundations. May invest indirectly by becoming limited partners in venture: corporate investors capital firms. Many established corporations purchase equity in younger, private companies. Desire for investment returns: existing an investment in a private company. Taking your firm public: the initial public offering. The process of selling stock to the public for the first time is called an initial public offering (ipo) Advantages and disadvantages of going public: advantages: Ipos include both primary and secondary offerings: underwriters and the syndicate.
