Equity investors are part-owners in your business
You can raise money for your small business by selling an ownership interest — equity — to investors who want to own part of your business, instead of simply lending you money. Raising needed money for your business in the form of equity investments may be preferable in some cases to raising the money in the form of a loan or other debt instrument.
There are a number of equity investment organizations in New Mexico. Finance New Mexico can help you determine if there is one out there to fit your needs. If you are an ACCION client and interested in equity investment for your business, be sure to let us know by clicking on the button below.
Having equity investors can be a complex decision
A qualified tax advisor, accountant, or attorney will generally be able to help you explore whether an equity investment is right for you and your business.
Advantages may include:
- Equity investors may have valuable experience that will help grow your business.
- Equity investments allow you to use your cash to cover start-up expenses rather than loan payments.
- Unlike a lender, you may not have to repay investors if your business does not succeed.
Important points to consider:
- Equity investors may take a larger share of profits than a lender because they are taking on greater risk.
- Equity investors are co-owners with defined legal rights.
Passive investors commonly hold their ownership stake in securities such as common stock. Stockholders may receive dividends, vote on corporate matters, and receive information about the company, including financial statements. A company must be incorporated under state law in order to issue common stock.
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