Bros, what is Equity financing sef? 

Bros, what is Equity financing sef? 

Equity financing is one of the ways for entrepreneurs to raise (get) money to grow their businesses. 

As you can see, the money is being raised to “grow a business” not to start something new that no one is sure whether it will “make it” or not. 

In order, to raise the money needed, the entrepreneur needs to sell shares (not his or her body) of ownership in his/her company to investors who are interested in owning the business with the entrepreneur. 

Imagine you have a business, and you want to expand it, but you need 180 Million Naira to do so. Instead of borrowing money from a bank (interest rate can be as high as 35%), or sowing seeds of faith and trusting God to magically bring the money, you can offer ownership stakes in your business to investors in exchange for the money you need. These ownership stakes are called shares or stocks.

When investors buy shares of your company, they become owners of a part of your business. This means they have a say in how the business is run, and they are entitled to a portion of the profits your business makes.

As your business grows and becomes more successful, the value of the shares that investors bought can increase. This means that if they decide to sell their shares later on, they could make a profit if the value of the shares has gone up.

It is important to understand that giving away ownership in your business means you are sharing control and decision-making power with the investors. If you make profits, you may need to share those profits with the investors as well.

Equity financing can be a good option for Nigerian entrepreneurs who want to grow their businesses without taking on debt. It allows you to get the money you need while sharing the risks and rewards of ownership with investors.

Investment is not a debt that needs to be repaid. That’s the good news!