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Finance & Funding
- What should I know about equity financing?
Samir DandekarFinance & Funding
Equity financing means an investor is making money available to you for use in your venture. In exchange for providing funds, they take ownership in the business as determined by the share structure - the venture issues common shares. Sometimes equity investors act silently or as limited partners and therefore assume little role in the business. Regardless, equity financing reduces your financial risk but can also decrease your return on investment because there are multiple stakeholders.
Debt financing or borrowing money, rather than issuing common shares, can increase the potential for profitability given that you're the only owner. You also maintain complete control of the company. However, choosing debt over equity financing does put you at higher financial risk, should the venture fail to succeed.
The Canada Business website provides detailed information on debt versus equity financing. The site also provides a list of Private Equity lenders. Visit http://www.canadabusiness.ca/eng/guide/209/
About Samir Dandekar
Samir Dandekar, Asst. VP Business Banking, HSBC, which has designed banking services to cater to the unique needs and challenges of Owner Managed Businesses. Company Website