O'Reilly logo

Entrepreneurial Finance, Third Edition: Finance and Business Strategies for the Serious Entrepreneur, 3rd Edition by Roza Makonnen, Steven Rogers

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

8

Equity Financing

INTRODUCTION

Equity capital is money provided in exchange for ownership in the company. The equity investor receives a percentage of ownership that ideally appreciates in value as the company grows. The investor may also receive a portion of the company’s annual profits, called dividends, based on his ownership percentage. For example, a 10% dividend yield or payout on a company’s stock worth $200 per share means an annual dividend of $20.

Before deciding to pursue equity financing, the entrepreneur must know the positive and negative aspects of this capital.

Pros

• No personal guarantees are required.

• No collateral is required.

• No regular cash payments are required.

• There can be value-added investors.

• Equity investors ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required