Drew has an idea for a new company and needs money to start his business. Drew finds a friend willing to give him money in exchange for a portion of Drew’s new company. What term describes the type of financing the investor is willing to give Drew?
Question
Drew has an idea for a new company and needs money to start his business. Drew finds a friend willing to give him money in exchange for a portion of Drew’s new company. What term describes the type of financing the investor is willing to give Drew?
Solution
The term that describes the type of financing the investor is willing to give Drew is "Equity Financing". This is when an investor gives money to a business in exchange for a share or a stake in that business.
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