Equity Funding
Equity Funding is raising money for a business by selling ownership shares to investors instead of borrowing.
Equity Funding involves a company issuing shares in exchange for capital, giving investors part ownership rather than creating a repayment obligation like a loan.
Key points:
Can come from founders, angel investors, venture capital, private equity, or an IPO
Investors share in both the profits and the risks of the business
Unlike debt, there is no fixed interest or repayment schedule
Example:
A startup raising ₹5 crore by giving investors a 20% stake in the company is an example of equity funding.