Investors like to minimize their risk. That generally means that a business entity that provides a liability shield is preferable. In a partnership, an investor would effectively become a partner by contributing capital and sharing in the right to manage and to receive profits. However, partnerships provide no liability shields. A limited liability partnership (LLP) can receive investment contributions from either general partners or limited partners. A general partner has no liability shield. However, a limited partner's liability is limited to the amount of his or her contribution. Members in a limited liability company (LLC) also enjoy a liability limitation.

Only corporations provide a liability shield and can issue stock. Stock can be issued either as voting shares (which allow shareholders some control of the company) or non-voting shares. A corporation can issue just a few shares to a small number of shareholders, including investors, or it can make a public offering to the broader market of investors.