Equity Financing

If you are looking for funding of a new business in India you have a lot of options open to you, from financing the project yourself, borrowing money from friends of family or using equity financing from private investors in India or abroad.

What exactly is equity financing? Simply put, equity financing is a means of financing a venture through giving away equity or shares in your company in return for funding. This means that an outside investor will own a part of your company. Whilst many entrepreneurs may not want to give away equity in their company to a third party, in some cases it is the only option to get a business of the ground in the first place.

When looking to carry out equity financing it is important to decide just how much money you require and how much equity you are willing to give away in your business. Remember that you will want to keep a controlling stake of the business so if you have multiple investors providing money for your business the percentage of equity that they are given needs to be lower than your total stake or you could loose control of your company.

Whilst you are likely to have to report back on the success of your business to your investors on a regular basis, private investors are unlikely to want to help you run your business, therefore you will likely still be in control of your company.

Whilst there are other ways to raise money for your business in India, from grants to bank loans in many cases new businesses do not qualify for this form of funding and the emergence of equity financing companies and private investors in India are increasing. Therefore if you are looking to launch a business venture in India and do not mind giving away equity in that business to private investors then you have a much better chance of raising the money you need to begin your company.

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