Raising capital is key to building a thriving business and fuelling growth. For company founders, fundraising often begins with seed money from friends and family, but as a business succeeds, they often look elsewhere for extra cash.
A significant milestone in some companies development may be an initial public offering, or IPO, when a company obtains a listing on a public exchange to allow the general public to buy and sell shares.
But there is an alternative to the IPO: the private placement.
What Is It?
A private placement is an offering of unregistered securities to a limited pool of investors. In a private placement, a company sells shares of stock in the company or other interest in the company, such as warrants or bonds, in exchange for cash.