equity financing

Equity Financing

The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation.

Notes:

This is when a company raises money by issuing stock. The other way to raise money is debt financing, which is when the company borrows money.

See also: Debt Financing, Equity, Financing, IPO, Paid in Capital

---

equity financing

The acquisition of funds by issuing shares of common or preferred stock. Firms usually use equity financing when they are unable to raise sufficient funds through retained earnings or when they have to raise additional equity capital to offset debt. Compare debt financing.