BusinessWeek: Raising Capital, Equity vs. Debt

Jill Hamburg Coplan wrote an excellent article recently about small businesses raising capital. The lack of understanding concerning the basics of debt financing versus equity investment is troublesome. Astute business owners should know these basic concepts along with the benefits and problems of each type. The issue goes goes beyond the simplistic reasoning that early stage companies are better suited for equity and later stage mature companies should borrow money. It is critical to build a finance strategy that allows for a) getting in and out of a particular deal b) ability to raise additional capital c) doesn’t alter the core mission of the founders. Knowing what the providers of capital are doing at any given moment in a struggling economy is key to not wasting precious time looking for capital in the wrong places. Reading “Raising Capital: Equity vs Debt” should help.