Debt Financing vs Equity Financing Which One is Better

1. Debt Financing vs Equity Financing – Which One is Better? What is Equity Financing? In this kind of financing, a person invests some money in your business in returns for a certain part of ownership. Equity financing may emerge from a private investor, a friend or relative, or by selling shares in your business to investors. There are also considered institutional types of equity financing, such as venture capital. Venture capital funds combined and look after money from affluent investors, then invest it in growth-oriented businesses. Equity financing generally refers to investors providing capital to new but capable businesses in exchange for ownership in the business. They are provided funds by top 10 stock brokers in India also. Those investors want the pay-out if the company they invested in goes public or gets developed. One drawback of this type of financing is that the investor may have his own say in regard to your company. A large number of startup owners decide to give their investors a place on their Board of Directors, awarding investors some influence over the business’s move. Pros of Equity Financing Good option for borrowing huge capital – If you want to start a business that needs huge amounts of money, equity financing may be a good option as compared to debt financing. Finding an angel investor to finance your idea seems a great deal altogether. Finding them is not a hard job as there are many who are ready to invest in an innovative business idea. However, you may choose to work with the best stock broker in India to get the best deal. Perfect for big growth ideas – If you precisely project your business to be the next big thing in the industry with a clear business roadmap, financial estimations, and other solid data to persuade cultured investors you can do it, then it may be worth considering venture capital financing. You’ll need a strong management team, the ability to “sell” your concept, and a business plan that will generate a big return on the investors’ capital within a short time period—usually three to five years.