Why is it reported as news that a company has "raised money"?

Question

For example, it's been reported that upGrad raised 120 million from Temasek. What does this really mean? Why would a education company want to raise money from another investment company? What is the involvement of the investment company here?

Answer 1

Companies raise money so they can spend it, by and large. So the first thing this tells you is that the company (upGrad in your example) will have some money to spend. It might be able to hire more instructors, or more sales staff. It might be able to acquire a big new building, or spend more on advertising, or other "you have to spend money to make money" activities. So if you have, or are considering having, a relationship with this company, you know they have more money to spend and that they at least believe this will lead to more revenue.

Secondly, not everyone who wants a few extra million to spend gets it handed to them. The fact that the investment firm has chosen to provide the money also gives you information. It tells you they looked over the plans, the management team, the current structure, and so on and concluded that "if we provide this capital, we'll get a good return". That's a sort of vote of confidence.

I say "sort of" because sometimes the folks providing the capital are thinking "this could be a gold mine if only they started doing X, which they are not doing right now." For example, offering different services, paying less for instructors, moving from classroom to online, or whatever. So sometimes a raise like this heralds a significant change in the way the company operates. Depending on what relationship you have or intend to have with them, you might not like that change.

And finally, the news release itself often gives you information about the company and its plans: how many customers it has now, whether it's the biggest whatever in which country, is to going to expand to other countries, that sort of thing. A well written article will also include information like who their competition is or what the relevant issues in that industry are at the moment (for example, the pandemic pretty much stopping all in-person training while raising the demand for online training.) This will let you learn more about the company within the context of its industry, just from one article. It may also give you names (of people in the company, of competitor companies, etc) you can use to search for more information.