When a company needs capital to grow, acquire or expand, it broadly has two options: raise equity by bringing in investors, or raise debt by borrowing. Most companies use a mix. The right balance depends on the business, its stage and its appetite for risk.
Equity
Raising equity means selling a stake in the business. There are no repayments and the capital is patient, which suits earlier-stage or higher-risk growth. The cost is dilution — the owner gives up a share of ownership and future value, and often a say in how the business is run.
Debt
Debt is borrowed and repaid with interest. It does not dilute ownership, which is its main appeal, but it must be serviced regardless of performance and it adds financial risk. Debt suits businesses with stable, predictable cash flows.
Finding the right mix
The best capital structure balances cost, control and risk against the company’s plans. An adviser helps model the options, approach the right investors and lenders, and negotiate terms — so growth is funded without compromising the business.