Final answer:
A company that sells off shares to raise capital is called a public company, especially after an initial public offering (IPO), which helps repay early investors and raise funds for expansion.
Step-by-step explanation:
When a company sells off shares to raise capital, it is referred to as a public company, particularly after it has undertaken an initial public offering (IPO). An IPO is a significant event for a company, as it allows the firm to raise funds to repay early-stage investors, such as angel investors and venture capital firms, as well as to secure financial capital for expansion. After the IPO, the company can also issue additional stocks as secondary offerings or sell treasury stock to raise more capital. Shareholders of a public company can be numerous and spread across the public, leading to the election of a board of directors who make key decisions for the company.