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Raising Capital – traditional IPO, venture capital, and crowd funding

07 Mar

PRACTICAL STOCK INVESTING

I want to write about what I think are the implications of the new legislation circulating in Congress to permit greater use of crowdfunding by start-up companies raising money.  But to do this I think I should outline the way corporate equity capital is typically raised today.

going public through a traditional IPO

This is still the best way to raise LARGE amounts of money for expansion.  That’s not the only reason for going public, however.

One of the many clichés on Wall Street is that small companies should raise equity capital when they can (in other words, when investors would kill to acquire shares in a hot new concept), not when they absolutely need to.  Better to have cash you don’t have a present use for than to find the equity market closed to IPOs in a recession.

A public listing will probably be seen by potential business…

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