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In order to start a business, capital must be amassed. This can be done by way of borrowing money from others, including those that may end up claiming stakes in companies. This is where equity finance comes into the picture, and it's a fairly common business practice as well. For aspiring entrepreneurs that are looking to build funds, here are some questions that would be wise to ask. As the likes of Robert Jain can attest, you'll have an easier time starting your business.
"What, exactly, does equity finance entail?" If you're unfamiliar with the term, equity finance refers to the raising of money through investors. The reason why investors put their money into businesses, according to such names as Bob Jain, is to make back what they put in and then some. One can make the argument that this makes the investors in question partial owners. This is just a brief overview, but it should give you a general understanding of what equity finance is about.
"What types of equity financing are there?" It's important to note that equity financing can be broken down into different subtypes. Angel investors are wealthy individuals that invest money for the sole purpose of seeing a high return on investment. Family financing, hence the name, is the act of borrowing money from family members looking to support their loved ones' business endeavors. These are just a few categories to make note of.
"How do I benefit from equity financing?" One of the upsides of equity financing is the fact that you'll be working alongside those that have an interest in your business. What this means is that they'll be more likely to work with you and perhaps even provide insight when needed. Furthermore, business owners won't have to commit as much of their own resources. Reasons like these should be enough to give equity financing serious consideration.
"What are the drawbacks of equity financing?" When it comes to downsides, it's worth noting that the act of finding investors can be difficult. This is especially true if you're new to business ownership, have few contacts, or are looking to provide a niche product or service. Additionally, your share in your company will be smaller if you have third-party investors working with you. Simply put, you should know the risks of equity financing.
"What, exactly, does equity finance entail?" If you're unfamiliar with the term, equity finance refers to the raising of money through investors. The reason why investors put their money into businesses, according to such names as Bob Jain, is to make back what they put in and then some. One can make the argument that this makes the investors in question partial owners. This is just a brief overview, but it should give you a general understanding of what equity finance is about.
"What types of equity financing are there?" It's important to note that equity financing can be broken down into different subtypes. Angel investors are wealthy individuals that invest money for the sole purpose of seeing a high return on investment. Family financing, hence the name, is the act of borrowing money from family members looking to support their loved ones' business endeavors. These are just a few categories to make note of.
"How do I benefit from equity financing?" One of the upsides of equity financing is the fact that you'll be working alongside those that have an interest in your business. What this means is that they'll be more likely to work with you and perhaps even provide insight when needed. Furthermore, business owners won't have to commit as much of their own resources. Reasons like these should be enough to give equity financing serious consideration.
"What are the drawbacks of equity financing?" When it comes to downsides, it's worth noting that the act of finding investors can be difficult. This is especially true if you're new to business ownership, have few contacts, or are looking to provide a niche product or service. Additionally, your share in your company will be smaller if you have third-party investors working with you. Simply put, you should know the risks of equity financing.
About the Author:
For additional insight about equity finance, kindly consult Bobby Jain.. Also published at What To Ask About Equity Finance, With Robert Jain.
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