Just about every entrepreneur could use a nice chunk of capital to start or expand their business right now. But it usually comes with a steep price on it. The two main term classes of OPM (other people’s money) are debt financing and equity financing.

Simple definitions…

Debt financing is when you take capital and agree to pay back the investor the original amount plus interest.

Equity financing is when you take capital and give the investor stock or ownership in your business or asset.

Now, as an entrepreneur with a business, how do you chose which type of financing to pursue? It depends on your risk tolerance and unique deal but I will tell you about my own situation.

First, when it comes to entrepreneurship, I am all about building big businesses. I have several plans for businesses that have the potential to be truly revolutionary enterprise companies. I’ve always cringed when I think of giving away a large percent of a company that I see being very profitable. So when I have a company or business plan that has a lot of real potential in my mind then I will not take equity financing unless I’m receiving an unreal deal.

I will take equity financing for smaller business plans of mine or non-unique investments like real estate and some businesses.

I prefer debt financing over equity financing. Using debt financing does entail more risk for your business’ survival but the reason why I go for it is because I believe it offers better odds for making multiple billions of dollars in net worth over the long run when combined with a very smart multi-business hands-off management system.

I’ve also pondered a few hybrid debt/equity financing options. These have just been purely theoretical ideas from me that look great on paper along with a good asset but I have no idea how they would be accepted in the real world.

So the actual action I am taking right now in my life is to focus on creative investing to buildup my own first $1 Million within one year. I will then be able to fund some of my plans more freely and be able to attract a lot more capital on the terms I want to start companies.