We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Business

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What are the Best Tips for Raising Equity Capital?

By Osmand Vitez
Updated: May 17, 2024
Views: 3,657
Share

Raising equity capital is necessary when an entrepreneur wants to start his own business or an established company needs capital for new investments. Equity capital comes from investors, equity groups or firms that offer capital as a type of loan to another organization. When raising equity capital, individuals and companies need to have a plan, approach the right type of investor, provide a benefit to the investor and maintain a close relationship with the individual or company providing the equity capital. The approach for either the entrepreneur or an established firm will be slightly different during this process.

Entrepreneurs starting a new business will often write an extensive plan outlining the expected path of the company. Within this plan, the entrepreneur should include a detailed financial plan. The plan will list every expected expense for starting the company and the first few months of expenses. When visiting companies for the purpose of raising equity capital, entrepreneurs should demand a face-to-face meeting. This allows for direct questions and answers in order to achieve the goal of obtaining the funds.

Established companies will need a similar plan when raising equity capital. However, the plan will need to include information on the expected benefits of the plan and the financial history of the company. A strong financial history and information relating to the company’s ability to pay off loans and investments can help secure equity capital.

The right type of investor can make a big difference when entrepreneurs or companies engage in the process of raising equity capital. Certain types of investors will not engage in providing funds for start-up companies due to the associated risk. Entrepreneurs should eliminate these groups prior to setting up meetings. Established companies should look for investors who are familiar with certain industries or have a solid history of equity investing. Failing to select appropriate equity lenders can result in unfavorable terms for the duration of the investment.

Making concessions to equity investors is often necessary to secure the proper amount of funds for starting a business or beginning new projects. Individuals and companies seeking funds should ask what the most important goals are for the investor and determine how these will affect the investment process. During this process, borrowers should also seek to maintain close relationships with all investors offering funds. This process starts with the initial meeting and follows through to the end of the process when the investors receive all their funds back. Keeping a strong relationship will ensure the availability of future funds if the entrepreneur or company needs more funds.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Editors' Picks

Discussion Comments
Share
https://www.wisegeek.net/what-are-the-best-tips-for-raising-equity-capital.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.