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What is Equity Funding
Equity funding is a method of raising funds to satisfy the liquidity needs of a corporation by selling a company’s stock in exchange for cash. The portion of the stake will depend upon the promoter’s ownership of the corporate.
One of the foremost sought-after methods of raising cash, aside from public issues, is via capital. Risk capital (VC) financing is the best method of raising money via high-net-worth individuals who are viewing diverse investment opportunities. They provide the corporate with much-needed capital to sustain business in exchange for shares or ownership within the company.
A start-up might need numerous rounds of equity funding to satisfy liquidity requirements. They like better to choose convertible preference share as a variety of equity financing, and because the firm grows and reports profit consistently, it’s going to consider going public. If the corporate decides to travel public, these investors (Venture Capitalists) can use the chance to sell their stake to institutional or retail investors at a premium. If the corporate needs extra cash, it can select the proper offer or follow-on public offerings.
When a corporation goes for equity financing to fulfill its liquidity needs, for diversification or expansion purposes, it’s to arrange a prospectus where financial details of the corporate are mentioned. The corporate must also…
