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Question added to topic MoneyAugust 10, 2007

What are the pros and cons of equity financing?

What are the pros and cons of equity financing?
The advantage to raising capital through equity (as opposed to debt) financing is that, if your business goes under, you don't have to pay the money back. Therefore, you can swing for the fences knowing that, even if you strike out, you can still get back in the game. The disadvantage to equity financing is that you're selling shares of your company -- often at a very low price -- to an investor who now owns a piece of your business and has some control over the way your run your operation. Assuming that your business becomes the next Microsoft or Google, selling equity could prove to be a very expensive way to raise capital. 

Rosalind Resnick is a New York-based freelance writer, entrepreneur, investor and author of The Vest Pocket Consultant's Secrets of Small Business Success.

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