Equity financing is a method of raising capital for a business by selling ownership stakes, such as stocks or equity securities, to investors in exchange for funds. Unlike debt financing, which involves borrowing money that must be repaid with interest, equity financing does not create debt obligations for the company. Instead, investors become shareholders and have an ownership interest in the business, entitling them to a share of profits and voting rights in corporate decisions. Equity financing can take various forms, including initial public offerings (IPOs), private placements, venture capital investments, and crowdfunding campaigns. It offers businesses flexibility in accessing capital without incurring fixed repayment obligations and may be suitable for startups, growth-oriented companies, or those with limited access to traditional financing sources.