Sunday, 2 September 2018

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Different Types of Stocks:

When a company is first founded, the only shareholders are the co-founders and early investors. For example, if a startup has two founders and one investor, each may own one-third of the company’s shares. 

As the company grows and needs more capital to expand, it may issue more of its shares to other investors, so that the original founders may end up with a significantly lower percentage of shares than they started with. During this stage, the company and its shares are considered private. In most cases, private shares are not easily exchanged, and the number of shareholders is typically small.

As the company continues to grow, however, there often comes a end where early investors become eager to sell their shares and monetize the profits of their early investments. At the same time, the company itself may need more investment than the small number of private investors can offer. At this point, the company considers an IPO (Initial Public Offering), transforming it from a private to a public company. 

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