Finance Dictionary : Equity Finance

Equity Finance


Discover Equity Finance, a capital-raising method involving investments in exchange for ownership in a business. Learn how it fuels business growth and fosters risk-sharing with various types of investors.



Equity finance is a method of raising capital for a business by issuing ownership shares in exchange for financial investment. This process entails individuals, such as business owners, friends, family members, or external investors like business angels and venture capitalists, contributing funds to the business in return for a share of ownership.


Equity finance offers various advantages, including facilitating business growth, risk sharing, and enhancing the financial strength of the company. It allows entrepreneurs to raise funds without incurring debt and provides investors with a stake in the business’s success. This method is commonly employed by startups and growing enterprises seeking resources to fund their operations, expand, or undertake new ventures.


Understanding equity finance is essential for entrepreneurs and investors alike, as it encompasses diverse financial arrangements and investment structures.


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