Equity Financing

Debt Financing

A method of raising capital by borrowing money that must be repaid over time with interest, typically through loans, lines of credit, or issuing bonds. Unlike equity financing, debt financing allows business owners to retain full ownership and control of their company. However, debt must be repaid regardless of business performance and increases the company's financial risk through required interest and principal payments.

Venture Capital

A form of private equity financing provided by investment firms or funds to early-stage or high-growth startups that demonstrate significant potential for rapid expansion and large returns. In exchange for funding, venture capitalists typically receive equity ownership and often take an active role in guiding the company's strategy and governance. Venture capital is a high-risk, high-reward investment that has fueled the growth of many major technology companies.

Angel Investor

A high-net-worth individual who provides capital to startups in their earliest stages, typically in exchange for equity ownership or convertible debt. Angel investors often invest their own money and may provide mentorship and industry connections in addition to funding. They usually invest smaller amounts than venture capital firms and are willing to take on higher risk because they invest at the earliest and most uncertain stage of a company's life.

C-Corporation

The standard corporate structure in which the business is treated as a separate legal entity and taxed independently from its owners, resulting in what is known as double taxation on both corporate profits and shareholder dividends. C-corporations can have unlimited shareholders, multiple classes of stock, and are the structure required for companies that plan to go public or seek venture capital funding. Despite the double taxation, C-corps offer advantages like the ability to retain earnings and provide employee benefits that are tax-deductible.