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    Posted by Shane McQuillan 3 Jul
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    Types of Capital Raising

    With any entrepreneur, no matter where they are in the world, action is what separates them from any other kind of individual with a plan. So whether it's some kind of side-hustle that you, as its founder, have been doing for a number of years, or if this is a brand new idea you're trying to take from blueprint to reality, there's one thing that you'll need - Money and the types of capital raising .

    For those that aren't: as the name suggests, Capital Raising is the process of securing investment capital through one or multiple avenues of investment, but it gets to be a little more complicated than just asking for money. And it's something that can become all the more complicated or holistic depending on where you are in your business' life cycle.

    Debt Versus Equity

    When a company wants to obtain some kind of Capital investment, these methods are split between either debt or equity-based capital raising. We'll take the time to break down the differences right here:

    Equity Capital Raising

    Much as the name suggests, this is the infusion of new capital under the pretext that investors are buying in for longer-term profitability without being directly paid back by the company.

    This method of capital raising is the preferred choice for major corporations, along with some startups, due to the associated challenges of Debt Financing/capital raising.

    Issuing Stocks / Company Shares -

    This is the most common practice for companies that are looking to raise capital for either their business in general or for a specific project that the company is looking to get started with.

    These publically traded shares can be bought by investors and provides value to the investor thanks to the annual return on investment they can expect to receive through the success of the business.

    Angel Investment / Venture Capital -

    The name gives the impression that this kind of investment comes from an altruistic individual or company interested in the project. Which isn't too far from the truth; Angel Investors provide capital in exchange for equity in your business.

    This form of capital raising is more common for small-scale businesses or startups. Venture Capital operates in a similar fashion, except that VC's will likely be more inclined to provide more capital, but expect a [sometimes much] higher return on investment.