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Equity capital refers to the funds generated by the sale of shares in a company. It's a way of raising money for business expansion, product development, or other operational needs, by selling a partial ownership interest in the company.
Equity capital is essential for growth-oriented businesses. Unlike debt financing, it doesn't require a repayment obligation. However, it does dilute the ownership stakes of existing shareholders, which can have implications for control over the company's strategic decisions.
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