Which of the following is a source of equity funding?

Which of the following is a source of equity funding?

• A. Angel investors
• B. Banks
• C. Subsidies
• D. Grants

Answer: (A)

Equity funding means raising money by selling ownership in the business in exchange for capital. Angel investors fit this because they invest early and take an ownership stake in return, becoming part-owners of the company. This money comes with ownership, not a required repayment like a loan. Banks provide debt financing: they lend money that must be repaid with interest, so it doesn’t create ownership. Subsidies and grants are typically non-repayable funds from governments or organizations; they don’t confer ownership either. They support the business but don’t dilute ownership. So, the source of equity funding is angel investors.

Equity funding means raising money by selling ownership in the business in exchange for capital. Angel investors fit this because they invest early and take an ownership stake in return, becoming part-owners of the company. This money comes with ownership, not a required repayment like a loan.

Banks provide debt financing: they lend money that must be repaid with interest, so it doesn’t create ownership. Subsidies and grants are typically non-repayable funds from governments or organizations; they don’t confer ownership either. They support the business but don’t dilute ownership.

So, the source of equity funding is angel investors.