Equity finance là gì

Definition: Equity finance is a method of raising fresh capital by selling shares of the company khổng lồ public, institutional investors, or financial institutions. The people who buy shares are referred lớn as shareholders of the company because they have sầu received ownership interest in the company.Description: Equity financing is a method of raising funds to meet liquidity needs of an organisation by selling a company"s stoông chồng in exchange for cash. The portion of the stake will depend on the promoter"s ownership in the company.One of the most sought after methods of raising cash, apart from public issue, is via Venture Capital. Venture Capital (VC) financing is a method of raising money via high net worth individuals who are looking at diverse investment opportunities.They provide the company with much needed capital to lớn sustain business in exchange of shares or ownership in the company. A start-up might need various rounds of equity financing to meet liquidity needs. They (VC) may like lớn go for convertible preference tóm tắt as form of equity financing, and as the firm grows and reports profit consistently, it may consider going public.If the company decides to lớn go public, these investors (Venture Capitalists) can use the opportunity to lớn sell their stake khổng lồ institutional or retail investors at a premium. If the company needs more cash, it can go for right offer or follow on public offerings.When a company goes for equity financing to lớn meet its liquidity needs, for diversification or expansion purpose, it has to lớn prepare a prospectus where financial details of the company are mentioned. The company has to lớn also specify as lớn what it plans to lớn vày with the funds raised.Equity financing is slightly different from debt financing, where funds are borrowed by the business to lớn meet liquidity requirement. Ideally, khổng lồ meet liquidity needs an organisation can raise funds via both equity as well as debt financing.

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