Below are some of the main equity finance advantages:
- One of the key equity finance advantages is that funding is committed to the business and its intended projects, even if plans change.
- Equity investors take a risk acquiring shares. In exchange, they can see an uplift in the value of their stake if the business performs well. This is a result of the deployment of additional capital.
- Investors naturally want the business to do well, so their investment increases in value. Therefore they share in your pursuit of growth and success. The growth and profitability of your enterprise will increase the value of the business, and therefore their shareholding.
- As well as taking a stake in the business, the right angels, venture capital investors or any other equity investor can bring valuable resources to the business. Their skills, experience and contacts can help with the development of the business strategy.
- If it is a private company, the business owner can sell their stake privately to a willing private buyer. Or if the business is to be listed they can sell their shares through the flotation.
- Investors are often prepared to provide follow-up funding as the business grows.
- Public equity raising provides a liquid market, which can be accessed if further fundraising is required for future growth plans.
- Equity crowdfunding provides a company with wider access to capital providers among customers and the public.
- If you choose a crowdfunding option, the crowdfunding process can be relatively quick.
Equity finance – what next?
The solutions section of this guide can give you more information on the various equity options available to you. You can access these most easily through the finance options chart.
Many forms of equity finance are supported by an industry body, and these are listed as partners on this site, along with links to their own websites, which contain more information and can help you to make an informed choice.