If you want to raise capital for your business, there are two forms that capital can take: debt or equity.
Raising equity means incoming investors receive an ownership stake in your business. The capital raised does not have to be repaid on a specific date, and there are no interest repayments. Instead, the investors own a part of the business, and so own a share of future profits and any proceeds on an eventual business sale.
There are two types of equity issuance: primary and secondary. Primary issuance means that the shares sold to new investors are newly created by the company, and the company retains the cash proceeds. Secondary issuances mean that incoming investors purchase shares off existing investors. The cash proceeds go to the individual investors, not the company, and there is no dilution.
This is different to raising debt, which generally must be repaid on a certain date, along with regular interest payments, and ranks ahead of equity if the business is wound up.
There are also instruments, such as convertible notes and preference shares, that have elements of both debt and equity. For a detailed comparison of debt vs equity and capital structure types, see our blog post here.
Some investors are able to provide either debt or equity to companies, while others specialize in debt. Their preferences in terms of risk (and return) profile vary wildly, as do their investment sizes, geographic and sector preferences.
Fundcomb is here to help you navigate this complexity.
What next? You can search our investor database and contact our investor network freely, or you can submit your deal to our investor network directly (and let others find you).