Equity financing is best suited for higher risk and innovative projects, that display strong information asymmetries and mostly translate into intangible assets; the low availability or lack of tangible assets to offer as collateral for debt finance is a serious issue, especially for start-up firms.
Equity can be raised through individual investors, venture capital or private equity funds, or, when a company matures, listing on a stock exchange. Private equity or venture capital financiers also provide managerial expertise and deeper knowledge of innovative sectors.