Which funding type involves ownership stakes for investors?

• A. Debt financing.
• B. Grants funding.
• C. Equity financing.
• D. Revenue-based financing.

Answer: (C)

Ownership stakes for investors come from equity financing. In this approach, a company sells a portion of itself—shares—to investors in exchange for capital. Investors become part-owners and may benefit from the company’s future profits through dividends or stock value appreciation, and they may gain some influence over decisions.

This differs from debt financing, which is simply borrowing money that must be repaid with interest and does not grant ownership. Grants provide funds without repayment and typically without any equity stake. Revenue-based financing repays a portion of future revenue and does not confer ownership. So, when the question asks which funding type involves ownership stakes for investors, the answer is equity financing.