Any young company looking to raise money must first decide on a type of financing: debt or equity. Debt financing refers to when a business borrows money that they then need to pay back with interest. Equity financing, on the other hand, is when investors inject capital or other assets into a business in exchange for a certain percentage of ownership. Startups should be aware of the advantages and potential downsides of each form of financing.
For an early-stage company, raising money is no easy task. Competition is fierce. Capital is finite. And good ideas are ubiquitous. So with so many challenges to overcome, it’s helpful to tap into the investors mind, see the world of startup fundraising through their eyes, and walk through evaluation processes in their shoes.