The Financial Cycle of Business
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Financial Cycle of Business In India, there was a time when companies need to borrow funds for their expansion plans.
But as soon as the Indian Securities Markets got popular in early 1980’s – the companies in India started Initial Public Offering also known as IPO to raise funds directly from the public by issuing equity shares to them.
ALSO READ: About Companies and Shares.
Financial Cycle of Business
The financial cycle of business starts from a startup entrepreneurs who look for the capital for their business to make their ‘ideas into reality‘ in the form of ‘seed capital‘.
Such entrepreneurs provides shares in the business to the person who invests in the initial capital.
These businesses are yet a sole proprietorship or a partnership business run by the group of peoples.
Afterwards, if the entrepreneurs business grows exponentially, and they need to expand it more then they need more capital.
Here, comes the ‘Venture Capitalists‘ who takes interest in such growing business entities and the investment opportunities in which they invests, in return the business provides them shares and warrants.
Here those businesses becomes a Pvt. Ltd. company still owned and run by the private group of peoples also known as the shareholders of the private company.
And now, if the company needs more capital to expands its business, then to raise funds for their capital such companies goes to public through Initial Public Offering in the security market by issuing it’s equity shares to general public.
After issuing it’s equity shares in the public such companies becomes a Public company.
Bottom Line
This is basically a financial cycle of business in India, like how a different businesses raise funds to expand their businesses in India, starting from the sole proprietorship, partnership to a Private Limited Company and then a Public Company.
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Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.
