Equity finance is a way of raising finance from external investors in return for selling a share of your business. The main providers of equity finance are friends and family, business angels and venture capitalists.
Unlike debt providers, equity investors do not have rights to interest or have to have their capital returned by a particular date. Equity investors are long term investors who earn a return on their investment through dividends and capital growth. They would usually expect a higher return than debt investors because the risk involved is greater.
Your business may be suitable for equity finance if it has:
- fast growth potential and a clear growth strategy
- an innovative product or service
- a strong management team
- strong intellectual property
- a clear and achievable exit strategy
Equity finance is available from different sources including: