All businesses need money to operate. Money to pay the rent, to pay employees, to buy furniture and equipment and to pay for supplies. A business can get this money from various sources – the owner’s personal savings, "bootstrapping" (using the profits from sales to grow the business), borrowing money from a bank, from an angel investor (usually wealthy individuals with an interest in the business sector) or from institutional investors.
For successful companies looking to expand their business, issuing shares to investors in return for cash is a very common method of raising finance. This funding (known as equity finance or equity investment, as opposed to debt finance from a lender) is attractive because it is unsecured, usually committed for a considerable length of time, and (unlike bank loans) strengthens the balance sheet of the company.
