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Questions
Questions about Equity Fund Raise
Plain answers to common questions on this service, grouped by what you are trying to find out. Each answer starts with the direct reply.
Basics
- What is a cap table and why will investors ask for it?A cap table lists who owns what in your company; see why investors request it, what it should show and how to keep yours accurate before a raise.
- What is a shareholders agreement and what does it usually cover?A shareholders agreement sets the rules between promoters and investors; see the typical clauses on control, exits and transfers that deserve careful reading.
- What does dilution mean when a new investor comes in?Dilution reduces each existing owner's percentage when new shares are issued; learn why a smaller share of a bigger company can still be worth more.
Eligibility & documents
- What should an investor pitch deck for a manufacturing business include?A practical outline of the slides an investor expects from a manufacturing business, written for promoters who have never prepared investor material before.
- Can a proprietorship or partnership firm raise equity from investors?Why outside equity usually needs a company structure, what partnership firms can do instead, and how to plan a conversion before approaching investors.
- Which businesses are a realistic fit for outside equity investors?An honest fit test for MSMEs: size, growth room, governance and promoter willingness to share ownership decide whether outside equity is realistic.
Process
- How do I find investors who actually back businesses like mine?Learn to match your sector, size and stage to investors with a real record in similar companies, instead of sending cold pitches to anyone who invests.
- What legal steps does a private company take to issue shares to an investor?A general walk-through of how a private company usually issues shares to an investor, from board approval to filings, for orientation only and not legal advice.
- How do investors check the numbers I share during due diligence?Investors cross-check your figures against tax records, bank flows, contracts and physical evidence; here is how verification works and how to be ready.
- What happens to existing shareholders when new equity is issued?When a private company issues fresh shares, existing holders see their percentage fall, may get rights to participate, and should check approvals and terms.
Choosing & comparing
- What is the difference between equity shares and compulsorily convertible preference shares?Compare plain equity with compulsorily convertible preference shares, including rights, protection for investors and what each means for promoters.
- Should I raise equity in one round or in stages?Weigh a single larger raise against staged tranches by looking at certainty of need, dilution, valuation timing and the effort fundraising takes.
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Read about Equity Fund Raise