Equity Financing involves investors, who provide capital for a
company in exchange for equity, or partial ownership, of that company. Whereas
debt financing puts the company on the hook for repayment, equity financing
puts all of the financial risk on the investor. However, because investors
incur that risk, their partial ownership of the company often entitles them to
input on larger company decisions, and gives them a long-term financial tie to
the company.