ABSTRACT
This chapter examines the basic approaches to equity financing, including angels, strategic partners, private placements, crowdfunding, and small business investment companies (SBICs). Equity funding is generally an investment that is made with the expectation of a return on that investment. Angels are generally willing to provide seed funding for start-ups or second-stage funding that will provide capital to help an early-stage business grow. Funding from the entrepreneur, family members, and friends can be structured as either debt or equity. More than 1,000 corporations engage in strategic investments through formalized corporate venture capital funds they establish to support emerging businesses in their industries. Ventures that are uniquely addressing large and/or rapidly growing markets are the most likely to attract angel investment. Private equity firms hire a team of experts who identify possible investments and then provide oversite once the investment is made. The typical sources of external equity investing are strategic partners, angel investors, private placements, and SBICs.
