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Understanding the Different Sources of C... > Sources of Equity Capital - Pg. 10

10 Raising Capital Sources of Equity Capital Private Investors. Many early-stage companies receive their initial equity capital from private investors, either individually or as a small group. These investors are called "angels" or "bands of angels," and they are a rapidly grow- ing sector of the private equity market. Institutional Venture Capital Firms. Perhaps the best-known source of equi- ty capital for entrepreneurs in recent years is the traditional venture capital firm. These formally organized pools of venture capital helped create Silicon Valley and the high-technology industry, which is our nation's fastest-growing sector. But as you will see in Chapter 9, these funds do very few deals each year relative to the total demand for growth capital, so be ready to expand your horizons. Mergers and Acquisitions. Mergers and acquisitions (M&As) with compa- nies that are rich in cash assets can be a viable source of capital for your grow- ing company. This kind of transaction triggers many legal, structural, and tax issues that you as the seller and your legal counsel must consider. There are more deals than ever among midsize companies as a result of the consolida- tion impact of technology, the "trickle-down" effect from the megamergers of