Sources of Equity Financing

The sources of equity financing are extremely important as far as the companies are concerned. This is because the money invested by them assists in the business operations. There are several types of sources of equity financing.

On Sources of Equity Financing

The sources of equity financing are the entities that put their money in other companies in exchange for a share in their equity or ownership. As far as business enterprises are concerned the sources of equity financing are extremely important.
It has been observed that the companies that have a reasonable track record find it comparatively easier to get the sources of equity financing.
This is because of the fact that equity financing is a pretty risky business and the sources of equity financing normally expect to have less risks involved while transacting with them.

Types of Sources of Equity Financing

The types of sources of equity financing are different for different types of businesses.
For example as far as the small business enterprises are concerned the major sources of equity financing are the angel investors apart from friends and family members, who could be counted as regular sources.

Expectations of Sources of Equity Financing

The entities that act as sources of equity financing do so with the expectation that they would be getting a certain part of the ownership of the company. At times they may also want a certain amount of share in the profits of the businesses they are investing in. The sources of equity financing, at times, also want to play an active role in the business where they have invested.

The entities that act as sources of equity financing do so with the expectation that they would be getting a certain part of the ownership of the company. At times they may also want a certain amount of share in the profits of the businesses they are investing in. The sources of equity financing, at times, also want to play an active role in the business where they have invested.

Usefulness of Sources of Equity Financing

It has been observed that the usefulness of sources of equity financing lies in the fact that the money invested by them can be used in order to run their own business operations. In case of the small business enterprises they can use this money for savings purposes.

 

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