Equity financing is raising funds for investment through sale of company stock. The many advantages and disadvantages equity financing make this option a tricky one.
Whether a company needs to mobilize funds through sale of equity depends on the company specific circumstances. The advantages and disadvantages of equity financing usually reverse in the case of debt financing, the major alternative source of funds. Most companies make a tradeoff between debt vs equity financing, and have a mix of both.
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For all the benefits of equity financing, it also comes with many disadvantages.