What are the differences between equity and debt funding?

What are the differences between equity and debt funding?

Equity funding involves raising capital by selling shares of your company, while debt funding means borrowing money that must be repaid with interest.

What are the advantages of equity funding?

Advantages of equity funding include no repayment obligation, access to expertise from investors, and potential for higher capital.

And what about the disadvantages?

Disadvantages include dilution of ownership, potential loss of control, and the need to share profits with investors.

How does debt funding work?

Debt funding works by borrowing money from lenders, which you repay over time with interest, often through loans or bonds.

Which option is better for startups?

It depends on the startup's goals. Equity is better for growth without immediate repayment, while debt is suitable for established businesses with steady cash flow.