| Private equity investors fall into the same investing | | | | make repayments with interest every month with |
| category as venture capitalists. They give financial | | | | debt funding. |
| help and practical guidelines to new ventures in | | | | Equity funding is the barter of money for a share of |
| exchange for equity. But venture capitalists put | | | | business. This enables you to secure financing for |
| money into novice projects expecting to receive a | | | | your company without taking on the burden of a |
| significant profit in the long term, while private equity | | | | debt. The sale of equity means taking on investors. |
| funding firms consider more developed ventures that | | | | Many small businesses obtain equity by bringing in |
| allow them to have a clear exit strategy. | | | | investors to make their business succeed and get a |
| Equity funding firms invest in fewer projects and | | | | profit on their investment. |
| intend to increase their profit margins by selling off | | | | The principal advantages of equity funding are that |
| the company or going public within in less than ten | | | | you do not have to pay back your investors even if |
| years. Company owners often get more money and | | | | your company goes bankrupt. Your business |
| deal with less red tape if they take the private | | | | resources are not required to secure equity. A |
| equity route rather than going public. | | | | business with adequate equity will seem better to |
| You need to know about the two major categories | | | | lenders, investors, etc. Because you do not have to |
| of business funding. It is debt funding and equity | | | | make debt repayments your business will have more |
| funding. Both financing options have their good side | | | | cash on hand. |
| and their bad side; making it easier to find the | | | | The main disadvantage is that you will have to |
| investor that fits your business in the optimal ways. | | | | surrender ownership and a share of your businesses |
| Debt funding refers to money that is borrowed and | | | | profit to other investors. The investors may have |
| has to be repaid over a period of time with interest. | | | | plans and ideas that are different from yours. And |
| Debt funding can be either short term or long term. | | | | you can't claim payments to investors back against |
| Short-term debt funding requires the loan to be | | | | tax. |
| repaid within a year. Long-term debt funding involves | | | | If you have a great business plan and are looking for |
| repayments for more than twelve months. With debt | | | | vc funding for it, a willing venture capitalist or |
| funding your only responsibility to your lender is to | | | | business angel is waiting to help you start you off |
| pay back your loan. Banks and traditional lenders are | | | | down the track. Venture funding is straight forward |
| the chief sources of debt funding. You will have to | | | | to find if your venture is set to grow. |