An equity round is a type of financing where a company raises capital by selling new shares of stock to investors. The proceeds from the sale of these shares can be used for various purposes such as business expansion, product development, marketing, or funding ongoing operations.
This type of funding can come from a range of investors, from individuals to institutional investors, depending on the company's stage and the round's size. While it can dilute existing ownership percentages, the intention is that the capital injection will expand the overall value of the company, benefiting all shareholders.
The price of new shares is based on the company's valuation at the time of the equity round, influenced by factors such as past performance, future prospects, and market conditions. Equity rounds are also subject to various laws and regulations to protect companies and investors alike.
