ABSTRACT
This chapter examines the basic approaches to equity financing, including angels, strategic partners, private placements, crowdfunding, and Small Business Investment Companies (SBICs). Angels are individuals who invest directly in entrepreneurial ventures. Certain businesses may be interested in providing equity financing to entrepreneurs because of their close business relationships or the potential for mutually beneficial working relationships in the future. Businesses with such close relationships are known as strategic partners or strategic alliances. Using the Internet and social media to rally a large number of people to offer financial support, usually in small increments, is known as crowdfunding. SBICs can provide a combination of equity investments and long-term loans to small businesses. As the funding is, in part, backed by the federal government, the risk is much lower to the investors in the SBIC. Equity financing, brings with it some disadvantages such as dilution, shark investors, and additional business partners.
