Financing of Small Medium Enterprising (SME) through equity finance is one of the most important processes for the economy of an emerging country because it helps the businesses, which for objective reasons, are not classified from banks as appropriate for crediting. This alternative form of investing it is not only cheap and favorable and for businesses because of risk sharing from investors, but also helps them (businesses) to benefit from professional investors knowledge and experience and to standardize their activity.
Equity financing, transfer of know – how and standardization of procedures enables SMEs with a financial discipline by ensuring long term sustainability in the market. Also this process serves as front face for SMEs to enter in the financial market or raise capital through the Stock Exchange. Professional investors who offer alternative funds for SMEs familiarize the latter with the culture of financial transparency and standardization of financial reporting, by preparing these small businesses for the banking sector or listing in the stock exchange.