Do investment banks finance companies and their IPO’s?
Sherril asks:
I heard that’s what investment banks do. But isn’t that what venture capitalists and VC firms do?
I heard that’s what investment banks do. But isn’t that what venture capitalists and VC firms do?
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Investment banks help the companies through the process of financing and doing the IPO. They sell the securities to the public. They may also invest some of their money in the securities.
Venture capitalists invest money in companies that they think will do well in the future. They invest to make money. They help companies by providing loans and equity capital, but the “vulture capitalists” are in it to make a buck.
Additional info:
The investment banks, when helping companies issue stock, are doing something that is highly regulated and controlled by the SEC and others. They have to be very careful to follow all the securities laws.
Venture capitalists are just trying to get rich by helping companies with good ideas. They usually gather together capital and try to find good places to invest it to make a great return. They are risking big investments in companies in the hope of a successful company and a great return.