Equity financing enables investors buy a stake in your business, giving you cash in return for shares.

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Unlike a loan, equity financing doesn’t have to be paid back, nor do investors have a right to interest or capital repayments. Instead, investors are betting that your company will grow to be highly profitable. For investors, it’s a long game: years after they’ve initially invested they can either cash out – sell their shares in your business for more than they paid for them – or reap a share of the profits.