We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is a Capital Infusion?

Esther Ejim
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Capital infusion refers to the process whereby funds are injected into startup companies or ailing companies by an investor with a financial interest in the company. Capital infusion also refers to the process of transferring money from a successful unit, division or subsidiary of a company to another unit that is not doing well with the aim of injecting new life into that unit. This type of capital infusion applies to big organizations where the operations are split into different subsidiaries with their own stake in the company, all working toward the common goal of profitability for the organization.

One example would be a company that manufactures hair products, cosmetics, diapers, kitchen utensils and vacuum cleaners that could be split into subsidiaries. It would have separate units for the production and marketing of the kitchen utensils, vacuum cleaners, cosmetics and baby products. If the baby products unit, cosmetics unit and kitchen utensils are showing a profit while the vacuum cleaner unit is barely making any returns, the management of the company could decide to inject funds from the other units into the vacuum cleaner unit in order to give it a much needed boost. This is an internal capital infusion.

Some startup companies may have a good premise or potential but lack the required funds to really get the company off the ground. A venture capitalist could decide to step in and provide the capital infusion needed to do necessary improvements like purchase equipment, lease a suitable space, hire and pay employees, and furnish office space. Venture capitalists are professionals who provide much needed capital infusion to startup companies. The investor may also be a benefactor or a business associate with a monetary stake in the outcome of his or her investment. Such a person will only make the investment with the intention of recouping his or her capital investment and making profits when the business is fully operational and starts to show a profit.

Venture capitalists also provide needed funds to companies experiencing a financial crisis, with the aim of gaining a stake in the company through the acquisition of shares and positions on the management board. Such professionals specialize in analyzing the potential profitability of an ailing company, while determining the pros and cons of providing the capital. If it is determined that the company will eventually be profitable and provide a return on investment, the venture capitalists will provide the capital infusion needed to keep the company afloat.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Esther Ejim
By Esther Ejim
Esther Ejim, a visionary leader and humanitarian, uses her writing to promote positive change. As the founder and executive director of a charitable organization, she actively encourages the well-being of vulnerable populations through her compelling storytelling. Esther's writing draws from her diverse leadership roles, business experiences, and educational background, helping her to create impactful content.
Discussion Comments
Esther Ejim
Esther Ejim
Esther Ejim, a visionary leader and humanitarian, uses her writing to promote positive change. As the founder and...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.