Whether you are still preparing for your business or have just launched it, I am sure you have great expectations and want it to succeed.
The two primary options to get funding for your business are to either leverage business debt financing or fundraise for equity investors. There are pros and cons associated with each method. It is important for entrepreneurs not to blindly follow the herd just because everyone else is following it. When this occurs, you must be aware of your investor financing options and the pros and cons of each financing option.
What is equity investment?
An equity investment is a form of financing in which incoming capital is exchanged for ownership rights in a company. And there are several options of equity investments including angel investors, venture capitalists and government agencies.
What is debt financing?
It has various forms and may co-exist with an equity investment in the company. Debt can be used to benefit all shareholders, including founders and investors, to fund the growth of the business without further diluting the ownership position of the existing shareholders.
Equity vs. Debt
One important note is that equity financing generally brings more cash than debt financing. In the absence of equity financing, capital growth can be much slower. Watch the video below to learn more about the pros and cons of each.