Financing provided by an equity investor is by far the best method to procure finance. There is no burden of debt but business owners would have to part with the right to ownership of company. Normally, the ownership is dispersed as shares and equities. Share holders, in this case the equity investors, enjoy voting rights and are eligible to attend annual general meetings of company. Sometimes, equity investors portray an interest in getting involved with the company and begin to take part in board of directors of company.

Professional equity investors can be angel investors or venture capitalists. Venture capitalists invest in businesses and get big returns. They can invest upto 10 times more than an angel investor. Equity investors are well aware that new start up business ventures involve risks and therefore they take time and consider many factors prior to approving finance. Repayment and returns are considered only when the company begins to make profit. Hence the financial burden is largely shared between equity investors and business owners. Moreover, equity investors can sometimes bring in valuable skills, contacts and experience for assisting in decision making and strategy planning. A long term good relationship can be expected from healthy relations with equity investor.

It is wise to keep equity investors informed about various business decisions as well as use resources available through them for better prospects of business. Equity investors can do businesses a lot of good with their long understanding of industry and invaluable contacts. Business owners have to be aware that there are equity investors who demand high maintenance and show case hawk like behaviour. It is advisable to take advice of a lawyer and finance professionals prior to approaching prospective equity investor. A clear plan with strategies charted out carefully is a pre-requisite for approaching an equity investor.