Question

Excluding Venture Capital, what are the sources of equity funding from external sources. Please list each one and explain each method and how each method might be applied differently depending on the nature, scale and vision of the company seeking the funds.

Answer 1

The sources of equity funding from external sources:

1. Through Stock markets: Through joint stock exchanges, companies can access equity from a vast number public investors.
2. Crowd - funding: A seemingly pacing investment scheme where investors do small contributions which are pooled and invested into big projects. Also the investors get their share of returns of the investments made.
3. Angel investors:These are wealthy investors who invest huge chunks of money in form of equity in return for share of organisation and ownership. They bring in their skills, competencies, experience along with monies hence are demanding and active investors.
4. Enterprise Investment: Some companies invest into other for investment purpose or may be for saving taxes on earlier capital gains realised. However the investments are subject to a certain set of conditions.
5. Retained Earnings: Companies cam by themselves retain their profits rather than redistributing and later on as need arises utlise it by converting them either into equity shares or do re-investments.
6. Venture capitalist: (to be excluded)