What are the Different Fundraising Services for your Company?
There comes a time when your current capital is not enough anymore, especially when you are seeking to expand your company.
Do you need to buy new land for the construction of your new hub? Do you need to acquire that equipment to make your operations run more smoothly? If the answer is yes, you need to be able to come up with the money you need to support your plans.
As they say, you cannot make money without infusing capital into your business. You can do this by opting to use fundraising services.
This will take time. You need to assess how much do you need to fund your venture. You must also decide how you are going to raise your capital.
Initial Public Offering
Initial public offering or IPO is one of the fundraising services your company can do to accumulate capital.
Under this scheme, a private corporation is offering its shares—corresponding to percentage of ownership—to the public from a fresh stock issuance. This effectively turns a private firm into a public one because this transaction allows the company to raise funds from public investors.
In doing so, the interested companies should be able to meet the requirements set by the Securities and Exchange commission and the stock exchange regulator. The corporation must hire investment banks as well to evaluate the transaction, set the IPO price and date, and market the shares, among others.
It can be advantageous to raise funds via IPO because this can open the door for further offerings. Converting to a public company means you have access to the stock market.
Being a public company means that you are also required to file quarterly reports on your financial performance and other material transactions. This can improve your transparency as a company, resulting in a better image as well.
On the downside, conducting an IPO is risky. The market watchers may not respond to the price of your shares, affecting the demand.
Another way for your fundraising services is through debt financing.
Debt financing refers to raising money by issuing or selling debt instruments to investors. The different kinds of debt instruments are bonds, bills, and notes.
The way this works is investors will receive a promise that the principal and interest on the debt will be repaid, depending on the terms of the transaction. In a way, the investors become creditors of the company.
Should the issuing company file for bankruptcy, the debt instrument-holding investors have claim on any liquidated assets.
The most common type of debt instruments are bonds. These are sold at market value.
Like in the initial public offering, issuing debt instruments also requires the expertise of investment banks.
Managing Money from Fundraising Services
Even before conducting your fundraising activities, make sure you know what the allocations for your proceeds are. You need to be able to itemize them carefully so as not to misuse the funds.
After knowing your spending priorities, ensure that the funds will be properly used. Always check the books, verify if the figures are correct. Check in with your accountant from time to time.
If you are seeking business advisory services in Singapore, reach out to 3E Accounting. They have an excellent team that is ready to serve you.