Equity Finance and your Business Funding

Equity finance refers to the way of raising capital through the use of an outside investor in return for handing over a share of the business. Equity finance is a long term investment in a business in return for a share of ownership as well as a degree of control over the business.

There are various types of equity finance available for your business with the two main providers of equity finance being Venture capitalists and business angels. A venture capitalist is mainly used by high growth businesses how are destined for floatation on the stock market and a business angel is especially important in the early growth and development stages of a business.

Equity finance refers to investments in businesses, which do not require the need to be paid back, meaning they do not have interest added on to them. Instead of paying equity finance back you merely hand over an aspect of your business shares to an investor. An investor will then also have some say in how your business is run, helping you make quick decisions with the success of your business constantly in mind.

The advantages of using equity finance far outweigh the disadvantages. Some of the main advantages include; funding is committed to your business and equity finance not only brings your business all of the start up finance it needs it also brings valuable skills, contacts and experience to your business. Investors also have the success of your business at the front of any decision that they make meaning they have a high interest in the growth of your business.

Some of the disadvantages of using equity finance to cover your business costs are the help of an investor can become highly demanding and they will start to have a degree of influence over the management of your business. Also the share of your business that you hold will become diluted as part of your business shares will belong to your equity investor.

Equity finance is an ideal solution to your business finance needs and it is important that the slight few disadvantages of using an investor doesn’t put you off equity finance as the results that your business will see will make every aspect of the investment worth while.

To find out more about ways of financing your business get in touch with Angel Start-ups today. We can put you in touch with some of the best business angels and venture capitalists around.