Companies raise their financial capital through selling their shares to the public or other private investing companies. People and firms do not need to take loans or credits by the banking systems. Most of the available options for the capital raising used by firms and entrepreneurs can be accomplished, directly or indirectly, through the stock exchange.
Capital-intensive startup companies, always require raising their financial capital volumes in their early stages. This is why; the public market offered by the stock exchange is one of the paramount funding sources for the capital-intensive startup companies.
Another source of capital for startup companies is the ‘venture capital’. It is another type of private equity. Venture capital companies invest in the early-stage firms in exchange for equity, which is an ownership stake in the firms they invest in.
Another benefit of the stock exchange market is that it provides ‘corporate partners’ to the private firms as an alternative source of capital. The corporate partner is usually an established multinational firm, which gives capital to the smaller firms in exchange for marketing rights, equity or patent rights.