PIPEs are highly structured investments negotiated directly with small-cap public companies.  In a typical PIPE transaction, PIPE investors purchase stock or notes at a discount to the market price.   Public companies pursue PIPE transactions for several reasons:

> They need capital to fund growth
> They cannot obtain bank financing
> PIPE funds can invest on short notice
> PIPEs and bridge loans are quicker and less expensive than alternatives  

Over the past decade PIPEs have become an institutionalized business adopted by the major firms on Wall Street as an important and flexible financial tool to finance public companies.  In recent years the PIPE market has been booming: according to Sagient Research Systems, in 2007 a record $80 billion was raised in almost 1,400 PIPE transactions, up from $28 billion for 2006.