Equity Funding Explained

Equity funding requires a business to sell a portion of ownership in exchange for capital and often entails handing over a certain degree of control of the company to the investor.

For small businesses, this type of funding is generally acquired through family, friends or partners in business.

Angel and Venture Capital are generally reserved for high-growth and high-tech companies that have a potential to offer investors a high return on their investment (often 10 to 20 times as much). For details on the difference between Angel and VC investors, please take a look at the following article: How are Angels Different Than Venture Capitalists?