Financing through Debt, Equity and Private Placements
Financing through Debt, Equity and Private Placements – Numerous methods exist to capitalize a company. The owner’s capital is the first and most obvious method. When that is not available, debt financing (a loan) through a bank or from friends and family members can be effective, especially if the amounts needed are relatively small.
However, personal guarantees by the owners are typically required. Equity financing through “private placements” to angel investors, friends and family, or venture capital is a sale of the stock in your business in exchange for cash from the investor. Equity financing is a more complex and expensive route but may make sense where you are raising a large amount of money.
Our goal as Corporate Counsel in assisting with financing, is to educate business owners on the appropriateness and legal requirements for each financing structure for their business and assist them in closing their financing transaction.