Equity Finance
Equity finance is a source of business financing whereby instead of having a loan on which a company makes interest payments, businesses seek a wealthy investor with an interest in the development of the business who funds their business activities which in turn contribute to the firm's growth. In return, the investor becomes a part-owner of the business and therefore is entitled to a share of any profits which the firm makes.
Financially therefore, there is a mutual benefit for both parties to try and make the business a success. Equity finance is also available in conjunction with debt financing options, and in fact it may strengthen an application for debt finance if the business has the financial backing of an investor. The main types of private equity financing are known as Business Angels and Venture Capitalists. For further details, see:
