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Hold 'Em

There are two ways to get outside cash into your business. Take a look at two entrepreneurs balancing the eternal choice between selling equity and borrowing.

This story appears in the July 2000 issue of Entrepreneur. Subscribe »

How a company raises expansion capital can have profoundly different effects on its owner. Robert Robison, an independent consultant in Sanibel, florida, who works with entrepreneurs getting financing, says, "Most entrepreneurs would choose debt [equity] if they could get it, because they believe they wouldn't have to give up any control. But it's not always a choice. Few new companies have assets to collateralize-like land, equipment or a patent. Entrepreneurs who do often end up leveraging their most valuable asset, and there goes the business if they don't satisfy the debt."

Of course, there's the psychology of ownership. Certain entrepreneurs just don't want to give up anything. According to Robison, "In [my] 15 years at PricewaterhouseCoopers, my biggest task in advising entrepreneurs was getting their mind around sharing control."

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