Drip Feed
Definition of 'Drip Feed'1. The process of investing on an ongoing basis in a small but growing firm over a period of time. Essentially, a drip feed results in a startup company receiving capital contributions as the need for capital arises, rather than getting a lump sum capital contribution at the company's inception.2. The process of retail investors contributing small amounts of their savings to their investment pool on a periodic basis, such as $200/month, for example. |
|
Investopedia explains 'Drip Feed'1. With this type of financing arrangement, startup firms operate with very little surplus capital; their financing needs are only contributed to by venture capitalists as the need for capital arises.2. Individual investors can benefit from this type of strategy: it reduces the risk of entering positions in overpriced securities, since the investments are spread out. This technique also moderately smooths market fluctuations for the investor, since he or she benefits from dollar-cost averaging (a fixed dollar contribution amount each month, for example, will result in more equity shares being purchased at low market prices than at high prices). Of course, as a trade-off for the safety of this added smoothness, investors sacrifice the potentially higher returns they might have seen if they had simply made a lump sum investment at low market prices. |
Related Definitions
Articles Of Interest
-
Take Advantage Of Dollar-Cost Averaging
We explain how dollar-cost averaging offers protection and opportunity in a sinking market. -
Dollar-Cost Averaging Pays
Get the most out of your mutual fund by using this simple but powerful strategy. -
Fight The Good Dollar-Cost Averaging Fight
Stop sitting on the fence and learn both sides of this hot debate. -
7 Unconventional Ways Businesses Can Borrow Money
Find out how your business can get the money it needs - even when the bank says "no". -
Should You Head Back To Business School?
Find out if an MBA is necessary for you to reach your professional goals. -
Women And Finances: Is There A Gender Bias?
Uncover some very complex reasons for female gender biases in the finance world. -
Female Entrepreneurs Are Surpassing Their Male Counterparts
The world of entrepreneurship is constantly changing; the last year has seen a significant shift in the performance of female entrepreneurs. -
Small Business: Speed Up Receivables To Avoid A Cash Crunch
Waiting for customers to pay can be a losing game. Look to factoring for quicker cash. -
Build Your Small Business During Downswings
Here we offer some cost-saving measures to strengthen your business even when the market is weak. -
In Small Business, Success Is Spelled With 5 "C"s
Incorporating these steps will help your business thrive in a competitive market.
Free Annual Reports