Published: June 15th, 2026
One of the biggest barriers to growing any business can be securing the right type of finance.
While loans and grants are often the first options that come to mind, equity finance can be a powerful route for ambitious companies looking to take the next step forward.
And if you’ve ever watched Dragons’ Den on the television, you’ll understand exactly what it involves.
An investor buys a share of your business in exchange for capital – allowing you to continue to grow and them to take a stake in your future success.
You don’t have to lose control of your business – the investor can buy a minority share – but it means you get a financial injection and additional expertise without the burden of repayments or interest charges.
Angel Investment
Angel investment involves individuals – often experienced entrepreneurs or business leaders – who invest their own money into early‑stage businesses in exchange for a minority stake, typically between 10% and 25%.
These investors are attracted to businesses with strong growth potential and may invest at pre‑revenue, pre‑profit or early‑profit stages. They often look for proof of concept, intellectual property or early traction to justify the risk involved.
Angel investors bring mentorship, sector knowledge and access to valuable networks and will look to work closely with founders over several years, helping shape strategy and supporting the business through early growth.
Venture Capital (VC)
Venture capital involves investment from professional funds, investment companies or corporate investors. These investors typically deploy larger sums than angels and take a more significant stake in the business.
While they are unlikely to want to play a part in the day-to-day running of your business, venture capitalists will usually want to take a strategic role and will often take a seat on the board.
VC funding is usually targeted at high‑growth, innovative companies that require substantial capital to accelerate expansion. The process of securing VC investment is more involved and can take several months, reflecting the due diligence and long‑term commitment required.
Private Equity
Private equity (PE) typically involves investment into more established businesses rather than early‑stage ventures. PE firms invest larger amounts of capital in return for a significant shareholding, often with the aim of driving operational improvements, scaling the business or preparing it for sale.
The most common type of PE investment is the leveraged buy-out, where the PE firm buys a majority stake in your business using a combination of equity and a large amount of debt.
The investor will then work to boost your company’s profitability to reduce the debt and generate a return on their investment. They may remain involved in the business for a number of years.
Equity Crowdfunding
Equity crowdfunding allows a large number of investors to contribute smaller amounts of money through regulated online platforms. In return, each investor receives a small equity stake.
This approach opens up investment opportunities to the public and can be particularly effective for consumer‑facing businesses with strong brand appeal or community support.
Crowdfunding can also double as a marketing tool, helping businesses build visibility and validate demand.
Initial public offering (IPO)
An IPO sees your business listed on the London Stock Exchange to generate investment from the public market.
It means you don’t have to lose control of your company – but will need to update shareholders regularly on its finances.
IPOs can be a good step for businesses which are established, growing or are planning further expansion and can be repeated over years to attract additional investment.
Expansion capital
Expansion capital (also known as growth capital or growth finance) helps your business to grow without you having to surrender control or ownership.
Expansion capital firms will make cash available in return for an equity stake, usually between 10-40%, and a seat on your board.
They will be looking for businesses with strong growth potential and an ambitious long-term vision for the future.
How the growth hub can help
If you’re based in Herefordshire, Shropshire or Telford & Wrekin, your first step should be your local growth hub. Each hub offers free, impartial guidance to help you understand whether equity finance is right for your business and how to prepare.
