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 ...
Get Entrepreneurial Finance, Third Edition: Finance and Business Strategies for the Serious Entrepreneur, 3rd Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
