Blog1 The Return of Financing

The definition of financing is a process of providing funds for business activities, making purchases and investments. Financial institutions can provide funds for companies and individual to purchase their products and achieve their goals. So financing plays a driver key of any economic systems.

There are two main types of financing tools for companies: debt and equity. Equity financing means that companies' shareholders sell part of their ownership to attract new shareholders, while increasing the total equity financing. Moreover, debt financing means a company sell bonds to individual or institutional investors to increase their capital. Their relationship is bidirectional. It is called equity financing from the perspective of borrowers and called debt equity from the perspective of investors

Alibaba is valued at $470 billion after eight rounds of financing, which is a classic successful project that made Alibaba become one of Fortune Global 500 companies. In September 1999, Alibaba founded by Jack Ma and his co-founders with an initial capital of 500,000 yuan. Among the 18 founders, Joseph Tsai used his ties to Goldman Sachs to attract Goldman Sachs, Singapore's TDF fund, and Sweden's Investor AB to invest $5 million in Alibaba in October 1999.In 2000, Jack Ma brought Alibaba a second round of financing. The investment of $25 million came from six investment companies including SoftBank, Fidelity Investment Group and Transpac Capital, among which among which SoftBank invested $20 million. In February 2004, Alibaba received a third round of financing about $ 82 million.

In 2005, Yahoo converted 39 percent of Alibaba's common stock, which raised $1 billion fund. And these funds also helped Alibaba go public on Hong Kong Exchanges and Clearing Limited (HKEX) in 2007, raising $1.5 billion fund. The next two deals raised $6.3 billion and Alibaba went public in the United States in 2014.

Alibaba is now worth $453.8 billion and rising in the ranking list of Fortune Global 500. The most profit is SoftBank in the investment institutions, SoftBank invested in Alibaba $80 million. There are more than 140 billion dollars market values and profit has increased 1,700 times. SoftBank's Masayoshi Son son has publicly described Alibaba as his most successful company to invest.

Financing can help a company obtain a large amount of capital, increase its investment activities and expand its business scale. The liquidity of the company's stock in the securities market can help the company to acquire other businesses.