CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What is external financing?

External financing

This describes money a company may raise from outside its business. It can refer to equity issues, where the firms in question raise funds thanks to outside investment.

Where have you heard about external financing?

You may have read about a firm launching an initial public offering (IPO) to raise funds. Shares are sold to institutional investors and then the public. This is a type of external financing.

What you need to know about external financing.

A firm may decide to launch an IPO or SEO to boost its finances, if for example, it has experienced falling profits. This gives new investors a chance to buy securities. However, firms may be reluctant as external financing often includes paying transaction costs, making the process expensive. An IPO may also mean the company having to divulge information that could prove useful to its competitors. The opposite concept is internal funding, which refers to money earned and retained through a firm's own profits.

Find out more about external funding.

Find out more about initial public offerings or season equity offerings with our definitions.

Related Terms

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 610,000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading