Equity Financing

The equity financing (Equity Financing) is a method of raising funds in which a company sells a portion of its ownership in the form of shares in exchange for capital. This financing is generally used by start-ups and growing businesses to finance their operations, expansion projects, or innovations, without having to take on debt. In return for the investment, the shareholders obtain a stake in the company, with the possibility of making a profit if it increases in value. However, this means that the original founders or owners are diluting their share of control over the business. The main advantage of equity financing is that there is no fixed repayment to be made, unlike traditional loans, which reduces financial pressure. However, shareholders often expect a return on investment in the form of dividends or valuation during a sale or an IPO.

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