Final answer:
Equity financing refers to the funds invested in a company in exchange for ownership, which means selling stock to investors. It does not obligate the company to make set repayments as debt financing does, and includes investments from venture capitalists and angel investors who may have significant involvement in business decisions.
Step-by-step explanation:
The financing that consists of funds that are invested in exchange for ownership in the company is known as equity financing. This form of financing means that when a company issues stock, it is selling a portion of the company to investors, who become shareholders.
Unlike with debt financing, where a company borrows money and is obligated to pay it back with interest, equity financing doesn't require the company to make such repayments. Instead, shareholders hope to earn a return on their investment through appreciation in the stock's value and, potentially, dividends.
Venture capital and angel investment are subsets of equity financing. Venture capitalists and angel investors provide capital to companies in exchange for equity, often involving ownership stakes that allow them a say in company decisions.
These investors not only provide funds but can also bring expertise and mentorship to a growing company. They are typically involved in early-stage financing when companies have high growth potential but are too small for an initial public offering (IPO).
Therefore the correct answer is B. Equity financing