[MUSIC] Why equity? There is no company without equity. It is of use at the beginning of your venture. All fisherman needed the product of fishing to start his own business. Accessing capital depends on the stage of development of your venture. What we call seed capital is used to launch your business. Hire employees, finance product development, acquire systems, build inventory. Seed capital is provided by friends and family and business angels. Business angels are worthy individuals, we invest high risk capital, and of motivated by factors other than [INAUDIBLE]. Yet, there are few ventures which start with positive equity. Most often, start ups are in the red for several years and the report negative earnings as accumulated deficit in the balance sheet. Even after you have a concept validity to buy early customers and all licensed protection, you may not generate positive return. Equity can be negative but it may not stay negative fore ever. You will need to source what we call early stage capital. Finally, you will need equity to finance growth up to the maturity phase. Even when your venture shows a profit, its productivity may be insufficient to finance growth. Let's take an example. Suppose your growth of revenue is 30% and because most of your costs are viable you expect your NOPAT to grow at 30%. You also expect your operating assets, remember operating assets equal fixed assets, plus working capital requirement to go at 30%. If the professional ones corresponds to the cost of your plant and equipment, the growth of your operating asset is financed by the growth of invested capital. If you want to keep your debt equity ratio constant, your equity needs to grow at 30%. Without initial equity, the only source of equity growth is returned earnings. Supposed there is no dividend distribution, net income needs to be 30% of equity to fund your growth. Written an equity the finance ROE, is the amount of net income written as % of showed equity. To fund your growth, ROE is needs to be 30%. If ROE is less than 30%, you need to raise equity and find ways to increase your ROE, otherwise you need to aim for lower growth. In other words, you need to adjust rate of growth and productivity. Hence, the importance to show to equity investor how you will use the proceeds. You will need to show that the majority of cash is spent on improving productivity through project development, sales marketing, buildings, strengthening this team, etc., etc. Equity financing is therefore its action but equity is money invested in your business in exchange for part ownership. Most of investors will want to own 20%, 25% of your company except friends and family, and business angels at the very beginning of your venture. Investors will expect to be offered high potential returns to compensate for the risk they are taking. They will want an exit plan. So that they can realize the profits in three to seven years time. The question comes naturally. Why not debt? [MUSIC]