Definition
Raising capital by selling ownership stakes in the company rather than borrowing money. It's the fundamental bargain of venture capital: you get money now, investors get a piece of your future success (or failure).
Example Usage
We chose equity financing over debt because we weren't profitable yet and couldn't afford loan payments.
Origin
Basic corporate finance term, fundamental to venture capital since its inception.
Fun Fact
Unlike debt, equity financing doesn't require repayment and doesn't burden the company with monthly payments, but it does mean permanent dilution and often comes with loss of control.
Source: Corporate finance and capital markets textbooks
Related Terms
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See “equity financing” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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