What are the differences between debt and equity financing?
Debt financing involves borrowing money that must be repaid with interest, while equity financing involves raising capital by selling shares of the company.
What are the pros and cons of each?
Debt financing allows for retaining ownership but increases financial risk. Equity financing dilutes ownership but doesn't require repayment.
Which option is better for startups?
It depends on the startup's situation. Debt can be risky if cash flow is uncertain, while equity can provide necessary funds without immediate repayment.
Can you give examples of each?
Sure! An example of debt financing is a bank loan, while equity financing could be getting investment from venture capitalists.
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