What is equity financing?

Selling shares of a firm to the public, institutional investors, or financial institutions is a means of obtaining new cash known as equity finance. Because they have earned ownership stake in the corporation, persons who acquire shares are referred to as shareholders.

The process of raising capital through the sale of shares is known as equity financing. The reason behind this may be short term goals like paying bills or long term goals like investment for a growth of a company. the process of raising capital through the sale of shares.

Equity financing involves the sale of common equity but also the sale of other equity or quasi-equity instruments such as preferred stock, convertible preferred stock, and equity units that include common shares and warrants.