Equity Funding - Ideal Funding For Your Business

Venture capitalists and private equity investors are very similar types of investor. They offer knowledge and funding to start-up businesses and receive equity. But venture capitalists invest in new businesses confident that they will receive a big profit in the future, while private equity funding companies look at more developed businesses that allow them to have a clear exit stragegy.

Equity funding firms invest in fewer projects and look to cash out by selling off the company or going public within in less than ten years. Company owners will often make more profit and will have less hassle with private equity investors than they would by going public.

When it comes to business funding, you need to know about the two major categories. The categories are equity funding and debt funding. Pros and cons can be found for each of these options; making it easier to find the investor that fits your project in the optimal ways.

Debt funding is concerned with borrowed money that has to be repaid - with interest - over a certain period. Debt funding can be either short term or long term. Under a short-term debt funding agreement, the borrower has a year to repay the creditor. In a long term the repayments will go on for over a year. With debt funding, all you have to do is make sure that you pay everything back. Banks and traditional lenders are the chief sources of debt funding. You will have to make repayments with interest every month with debt funding.

Equity funding is the barter of money for a share of business. This helps you to secure financing for your business without acquiring any debt. Selling equity refers to taking on investors. A large number of small-scale businesses obtain equity by working alongside investors to make their business profitable and get a return on investment.

The principal advantages of equity funding are that you do not have to pay back your investors even if your company goes bankrupt. Business resources do not have to be pledged as collateral to obtain equity. A business with adequate equity will seem more attractive to lenders, investors, and so forth. Your business will have more cash on hand because it will not have to make debt payments.

The downside of equity funding is that you will you will not own your company outright or receive all the profits: you will have to share these with the investors. Other owners may have different ideas than yours on how to run the business. Payments to investors are not considered as tax deductible.

If you have a great business plan and need vc funding for it, a willing venture capitalist or business angel is waiting to help you start you off down the track. Venture funding is simple to obtain if your venture has real potential.

Using Edge Venture to attract investors to your business is highly effective. Find the business funding you need from a database of hundreds of Business Angels. Visit Edge Venture now to learn more.

- Simon Murray

Free Ringtones for Elvis Presley, Ghost, Munsters etc. »« Tom Cruise is on Oprah TV again! Was he right and Brooke Shields and Matt Lauer wrong?