What are equity investments?

Equity investments are those that come from investing in a newly formed business in exchange for owning part of your business. So an equity investor (also called venture capitalist) will cover the start-up costs of a business, and then own a portion of it for the remainder of its existence.  more

They are another way for a developer to raise finance and are often used in conjunction with other capital-raising methods such as bank finance or off-plan sales. Who are equity investments aimed at? They tend to be targeted at the more experienced investor and individuals of high net worth, as well as funds, syndicates and investor clubs. The developer is often looking to raise several million pounds and may well use a mixture of large and small investors to achieve the desired finance. Why doesn’t a developer just go to the bank? Funding can be harder to secure in emerging markets and interest rates are often considerably higher than in the UK. It may be that the time taken to raise the money through a bank would mean the developer would lose out on an opportunity where securing an early deal is crucial. In many ways, equity investments reduce the risk for the investor and developer as the project is carrying less debt. In addition, it is often the case abroad that the developer ...  more