Raising Funds and Financing Instruments - Equity financing for private companies
3 important questions on Raising Funds and Financing Instruments - Equity financing for private companies
What is a venture capital firm? What is their exiting strategy?
A venture capital (VC) firm is an investment firm that provides funding to early-stage or growing startups with high growth potential in exchange for equity (ownership).
Key points:
Key points:
- Invests in risky, innovative companies that are not yet profitable.
- Provides capital, expertise, and mentorship to help companies grow. - limited partnership
- Aims to earn returns by exiting through an IPO or acquisition.
What are private equity firms? What is their goal?
Private equity firms are investment firms that buy companies, improve them, and eventually sell them for a profit.
Their goal:To generate high returns for their investors by:
- Acquiring undervalued or underperforming companies (public or private), - not start ups
- Improving operations, cutting costs, or restructuring,
- Selling or taking the company public at a higher value.
What are corporate investors? Why are their motives to invest?
Corporate investors are established companies that invest in other businesses — typically startups or early-stage firms — as a form of strategic investment, not just financial return.
Key characteristics:
- Also called corporate venture capital (CVC).
- Often aim to support innovation, gain early access to new technologies, or form strategic partnerships.
- May invest alongside traditional venture capital firms.
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