The third common source of capital for startup companies is venture capital. This source is largely available today, but the maximum statistical quantity that the enterprise company firm will invest in any company altogether is not unlimited, for the biotechnology company, approximately $ 15 million was in 2001.
The fourth alternative source of cash for a private company is a corporate partner, usually a established multinational company, which provides capital for small companies in exchange for marketing rights, patent rights or equity. Here, corporate participation has been used successfully in a large number of cases.
When people invest in savings through their savings through the IPO or by issuing the shares of the new company of the already listed company, it usually leads to the rational allocation of resources, because the money, which could be consumed, or Banks were kept in inactive deposits and banks were reinstated to help management boards finance their organizations. goes. It can promote business activity with the benefit of many economic sectors such as agriculture, commerce and industry, resulting in strong economic development and high productivity levels of firms.
Both casual and professional stock investors, as large as institutional investors or as small as an ordinary middle-class family, through dividends and stock price increases that may result in capital gains, share in the wealth of profitable businesses. Unprofitable and troubled businesses may result in capital losses for shareholders.
With the broad and diverse range of owners, companies generally improve management standards and efficiency to meet the demands of these shareholders and there are more stringent rules for public stock exchanges and public corporations imposed by the government. The ownership of the shareholders owned by the companies which are members of the general public and are trading shares on public exchanges, they have better management records than companies
In opposition to other businesses, which require huge capital expenditure, the investment in shares is open to both large and small stock investors because one person buys the number of shares that can be spent on it. Therefore, the stock exchange offers small investors an opportunity to hold shares of companies similar to large investors.