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Equity financing involves selling shares (equity) in the company to raise capital. Companies issue new shares to investors, who become partial owners (shareholders).

Debt financing involves borrowing money(usually through loans or bonds) that must be repaid over time. Investors become creditors and receive a promise of repayment (principal + interest).

Venture capital (VC) funds provide capital to startups and high-growth companies in exchange for equity. VC funds finance innovative businesses with significant resource needs. Startups pitch their ideas to venture capitalists for investment.