By Evan Vitale
(This is Part II in our series on different types of capital; including debt capital, equity capital, private equity, venture capital, angel investors and investors.)
Equity Capital, when compared to debt capital, is different in that you do not need to pay anything back to the investor.
No, it’s not a free loan.
Instead, you are selling complete or part ownership interest in your business in exchange for capital. Typically, an equity capital situation may arise with large-scale businesses who are running short of funds.
A common source for equity capital is from family members and relatives. In fact, in a recent survey, 30% of entrepreneurs said they raised all or part of the capital they needed through family members.
Be sure to talk to your business attorney before seeking equity capital. Know the risks before your seek this type of financing.
Also see: What is Debt Capital?
* * *
Evan Vitale is a multifaceted finance and accounting professional who provides Audit, Accounting, Tax, Due Diligence and Advisory services to Venture Capital Funds, Hedge Funds, Private Equity Funds, Family Offices, Small Business Investment Companies (SBICs), Funds of Funds, Other Investment Groups and their management companies.
Today’s market has made it extremely difficult to predict what the next day will bring. For Funds and Other Investment Vehicles, the expectations remain to balance the different opportunities with a continued focus on value creation in existing portfolios. The key to any successful organization is building and maintaining the trust of your investors. Evan has the expertise to help you shine in your investor’s eyes and stand apart from the competition.
Check out another blog by Evan Vitale here: http://evanvitale.com