How do companies raise money?

01:06 Mins Read

Ever wondered about how companies get the funds to run their business and fund their operations? Watch this video to find out.

Transcript

How do companies raise money? To carry on their operations, companies can raise money in many ways. Here are 4 such options. Most companies first resort to bank loans. Banks offer working capital loans and business loans to companies. Companies also rely on angel investors for funding. Angel investors are high net worth individuals with surplus cash, who are keen on investing in upcoming start-ups. Some companies resort to funding from venture capital firms. In exchange for their investment, these firms require a percentage of equity ownership in the company. An Initial Public Offering or IPO is another way in which companies raise money. Through this process, a private company transforms into a public company. Want to learn more about IPOs? We’ve got that covered in the next chapter of Smart Money.