Crowdfunding is using small amounts of capital from a large number of individuals to finance a new business venture or grow an existing one. Crowdfunding brings investors and entrepreneurs together by expanding the pool of investors beyond the traditional circle of owners, relatives, and venture capitalists. In return for an investment, backers receive equity shares of the company.
An investment in a private fund can take the form of debt or equity. Many, but not all, focus on private, non-public companies in their investing mandate. When an investor allocates to a private fund, they will receive shares or units of that fund. Private funds may also invest in public securities but will generally utilize an alternative investment approach, like a long/short hedge fund.
A “private placement” is a private alternative to issuing, or selling, a publicly offered security as a means for raising capital. In a private placement, both the offering and sale of debt or equity securities is made between a business, or issuer, and a select number of investors. Both public and private companies use the private placement market for a variety of reasons, including a desire to access long-term, fixed-rate capital, diversify financing sources, add additional financing capacity beyond existing investors (banks, private equity, etc.), or, in the case of privately held businesses, to maintain confidentiality.
