Equity finance



Equity finance is a way of raising capital from external investors in return for handing over a share of your business. This may take many forms, including a share of future profits or sharing the ownership of the business to some degree. See six sources of equity finance.

The two main providers of equity finance for smaller businesses are venture capitalists - a type of private equity firm - and business angels - who are typically high net worth individuals often with experience of being entrepreneurs themselves. Business angels could also be members of the public who are joining together to invest smaller amounts of money though crowdfunding.

This guide explains what equity finance is, examines the benefits and drawbacks, and gives advice on when it might be the best option for your business. It also looks at alternatives to equity finance.

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