reply to the students responce Do young companies use equity as a source of finance ? Why? student responce Young companies usually finance their company with equity,young companies/start up companies

reply to the students responce

Do young companies use equity as a source of finance ? Why?

student responce

Young companies usually finance their company with equity,young companies/start up companies find it difficult to raise external source of capital in the form of debt because of their poor historical record does not generate credibility. There credit history about the repayment structure of the debt they have issued is not available, due to the unavailability of credit history. These companies raise equity instead of debt.