According to findings of several surveys, one of the top challenges faced by entrepreneurs and businesses in Nigeria today is access to funding. Seemingly, funding is the bloodline of any form of business, whether it is a startup, nano, micro, small or medium-sized business, or an established large firm; knowing how to raise capital can often make the difference between business success and failure.
For businesses to do well and prosper, they require stable source of long-term funds which is not available in the money market . For instance, businesses need to expand their factories to remain competitive, and only a vibrant capital market can provide this type of long-term funding.The capital market refers to the part of the market where the financial instructions mobilise the savings of the people and lend them long-term so that new capital can be raised in the country.
“Equity capital is raised when a business sells its shares to investors. The ownership stake resulting from this equity investment allows the investor to share in the company’s profits. Equity capital is usually a cheap form of funding and is an important source of capital on a long-term basis. However, sometimes it involves going public, getting listed on an Exchange, and also giving up partial or major control of the business,” he said.