Eiginfjárveiting

Eiginfjárveiting is an Icelandic term that translates to "equity financing" or "equity investment." It refers to the process of raising capital by selling a portion of ownership in a company, typically in the form of shares or stock. This is a common method for businesses, especially startups and growing companies, to fund their operations, expansion, or research and development without incurring debt.

When a company engages in eiginfjárveiting, it offers equity to investors. These investors then become part-owners of the company, sharing in its potential profits and losses. The capital raised through eiginfjárveiting can come from various sources, including angel investors, venture capital firms, private equity funds, or even public offerings through stock exchanges. The terms of the eiginfjárveiting, such as the valuation of the company and the percentage of ownership being sold, are negotiated between the company and the investors.

For companies, eiginfjárveiting offers the advantage of not having to repay the capital provided, unlike loans. However, it dilutes the ownership stake of existing shareholders and may involve giving up some control over company decisions. For investors, it provides an opportunity to profit from the company's growth and success, but it also carries the risk of losing their investment if the company fails. The specific legal and regulatory frameworks surrounding eiginfjárveiting can vary depending on the jurisdiction.