Definition

Borrowing money to help a growing business without giving up ownership. It offers extra funds with a plan to repay over time.

What to consider

  • Be prepared for dilution of ownership.
  • Choose investors who add strategic value.
  • Clearly understand the terms of equity deals.

Real world scenarios

  • A startup raises capital by selling a portion of its shares to angel investors.
  • An entrepreneur offers equity in her company to secure funds for growth.
  • A small business brings in a partner to share ownership and investment costs.

Related terms

Entrepreneurial Finances