Ways in Which a Company Can Generate Investment

by Chris Joseph

Start-up and existing businesses often need to generate investment dollars to launch or expand their enterprise. Businesses can generate investment capital in a number of ways, many of which require the involvement of other parties who are looking for sound investment opportunities. Both small and large businesses can benefit from generating investment capital.


Privately held companies can "go public" by making securities available for sale for the first time through a process called an Initial Purchase Offer. The securities normally take the form of shares of stock, which are then traded on a public stock exchange. The securities may also be investment products such as bonds, notes or limited partnership units. Companies usually do not consider implementing an IPO until they are well established and profitable and need the additional capital to facilitate expansion.

Angel Investors

Smaller businesses looking for investment dollars to launch their operation may use the services of an angel investor. Angel investors are typically successful entrepreneurs who may provide $1 million or more of investment capital to small enterprises, typically consisting of 20 or fewer employees, that they view as having the potential for success. In exchange, angel investors receive a percentage of the business's equity. In many cases, they also have a great deal of input regarding the business's operating procedures until the business becomes self-sufficient.

Venture Capitalists

Venture capitalists are similar to angel investors in that they supply investment dollars to start-up or expanding companies. Unlike angel investors, venture capitalists typically want no control or input regarding the operation of the business, and may have little knowledge of the industry. Instead, the venture capitalists are professional investors who looking for opportunities to maximize their return on their investment dollars. Venture capitalists may take the form of individual investors or larger venture capital firms.


A sole proprietor can generate needed investment dollars by taking on a partner and forming a new entity called a partnership. Partners typically share the profits of the enterprise, as well as the expenses and risks. A primarily advantage for the entrepreneur is that she receives the influx of investment capital she needs to expand her business or keep it afloat. On the other hand, she may need to relinquish some of her decision-making responsibilities and control to the new partner.

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