Equity gets the headlines. Start-up raises, crowdfunding campaigns and angel rounds are exciting stories. But for most New Zealand small and medium businesses, giving away shares is a slow, expensive and permanent way to raise money, and often unnecessary. If your business has steady revenue or you own property, debt can fund growth while you keep every share.
What does giving away equity really cost?
Selling shares means selling a slice of every future dollar of profit and every future dollar of sale value. It can also mean:
- Shared control. Investors may want board seats, veto rights or reporting.
- Exit expectations. Many investors want a sale or liquidity event within a defined time.
- Time. Preparing an information memorandum, pitching, due diligence and negotiating a term sheet can take months.
- Complexity. Shareholder agreements, valuations and, for crowdfunding, many small shareholders to keep informed.
Debt alternatives that keep ownership
Property-secured business loan
If you or a supporting party own property with equity, a property-secured loan from $20,000 to $1m can fund growth quickly, with no financials or tax returns needed for the initial assessment. See second-mortgage business funding.
Unsecured business loan
For businesses trading 6+ months with steady turnover, an unsecured loan can fund a specific growth project, such as a new product line, a marketing push or an extra van.
Line of credit
Growth often strains working capital: more stock, more staff, bigger receivables. A line of credit can carry the extra load.
Asset finance
If growth means equipment, let the equipment secure itself. See asset finance explained.
Reinvested profit
The slowest route, but the cheapest. Many of the country’s best small businesses grew this way.
When equity really is the better answer
Being even-handed:
- No revenue yet. Lenders need a repayment source; pre-revenue ventures usually need equity.
- High-risk, high-reward. If the plan is to lose money for years in pursuit of scale, equity investors are built for that risk; lenders aren’t.
- Strategic value. An investor who brings customers, expertise or distribution can be worth more than their cheque.
- Community brands. For consumer businesses with loyal customers, equity crowdfunding can raise money and build advocates at the same time.
Debt vs equity at a glance
| Debt | Equity | |
|---|---|---|
| Ownership | You keep 100% | Diluted |
| Repayments | Yes | No |
| Speed | Days to weeks | Months |
| Control | Unchanged (subject to loan terms) | Shared |
| Best for | Predictable cash flow, clear use | High growth, high uncertainty |
| Long-run cost if business thrives | Fixed by the loan | Investor shares the upside |
A middle path
Some businesses combine the two: a modest equity raise from a strategic partner plus debt for the rest. Others use debt now to reach a milestone that justifies a much higher valuation later, so they give away less.
How we help
We arrange debt, not equity: property-secured business loans from $20,000 to $1m, and unsecured loans and lines of credit for businesses usually trading 6+ months. If equity suits you better, we’ll say so plainly. Start with a 60-second enquiry.