Whether the business is new or not, additional resources to finance projects and activities to support the company are needed. Depending on various aspects, one has to source funds and must return it with profit. Many capitalists invest on companies and businesses they knew that it will soon prosper. There are only few people who invest start-up companies because the risk they will face is rather high compared to companies with proven track records.
If venture capitalists are after the profit gained from the resources lend, the equity financing aims on higher rate of return by becoming part owner of the company. In this regard, the risk will be lowered compared to that of venture capitalists because they can have voice within the company and dictate what they think is the right thing to do.
Equity financing favors small businesses. Unlike venture capitalists, equity financers can be vocal about strategies that can be implemented to gain profit. If you are running a family business, it is better to get equity financers because these investors can be of personal level. Equity financing is like having business partners whom you can turn to for advices. They become part of the company and can be involved in its day to day activities.
Those who venture in equity financing need to have good relations to the management and to the financers. Both should know how to work to achieve a common goal. They can voice out opinions and discuss strategies to enable business growth.