Equity financing

Equity Term

A cycle of raising capital by selling new shares of a company is called an equity financing.

Often there are new investors buying the new shares, often alongside existing investors if there are any. Thus the cycle of an equity financing typically starts with finding and connecting with new investors, includes a long process of (sometimes mutual) evaluation, and finally concludes with the actual transaction of money going into the company in return for ownership.

Technically speaking an Initial Public Offering (IPO) is an equity financing, as is selling company shares to friends and family.

Don Gooding

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