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VC and IPO'S

4 important questions on VC and IPO'S

Who uses venture capital and why?

venture capital is for new build businesses and this is the way they try and get capital from investors by making a business plan and explaining why investors should invest

What is another thing you can do instead of venture capital?

crowdfunding, it is asking people over the internet to invest in your company, this is likely nowadays and it usually gives a propotype to the investors.

Explain what an IPO is and when this is made.

a initial public offering is when you decide and go public with your business, you need more capital for your firm but it is too much for people to invest so you start issuing shares and this way you can get capital.

What is the task of an underwriter?

when you want to make an IPO you will have to ask an underwriter to compute the risk and intrest the investors should get when buying your shares, most of the time the shares are underpriced because the underwriter first buys the issues fom you and then sells them himself in the stock market so he can also make money (spread) ( he is actually the risk taker)

The question on the page originate from the summary of the following study material:

Fundamentals of Corporate Finance | 9781259921964 | Richard A Brealey, et al

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