Equity financing provides capital to companies through public or private selling of interest in the company to individual, accredited, and/or institutional investors. In return for capital invested in the company, these purchasers of shares receive a percentage of ownership interest in the company.
Equity financing can take place in anticipation of an initial public offering (IPO) or through a private financing where a typically small group of investors takes an ownership stake in a company which does not trade on a public exchange. This type of private equity financing can ultimately lead to an IPO if and when the company’s ownership determines that the company is ready for it.
Early private rounds are often referred to as “Friends and Family” rounds due to the fact that invested monies come largely from those two groups. This is usually the seed capital which the company uses to begin operations and potentially start building “beta” versions of their product.
As the company grows, subsequent rounds can include “angel” investors as well as venture capital firms. The capital raised in these rounds is typically far more substantial than the “Friends and Family” round. These funding rounds can provide capital for a variety of purposes including finishing the product, hiring talent, expanding operations, etc. Due to the professional nature of these investors, the presentations given during these money raising phases must describe the company and its potential in unvarnished detail.
The team at Solvo Group, led by Dmitrij Harder, can provide the expert assistance required for equity financing whether your goal is an IPO or to raise capital for your company while remaining private.