On the British television series Dragons' Den, an entrepreneur usually offers an equity stake in exchange for investment.
Equity means ownership of part of a company. During a pitch, the entrepreneur normally states how much money is wanted and what percentage of the business is being offered. The Dragons then assess the company's prospects, valuation, management and potential return.
This arrangement differs from a conventional bank loan. A lender generally expects repayment with interest, while an equity investor becomes a part-owner and shares in the business's future success or failure. A Dragon may also negotiate a different percentage or propose additional terms.
The word “usually” matters because individual deals can include varied structures, such as loans, royalties or conditions attached to investment. Nevertheless, the programme is fundamentally built around entrepreneurs seeking capital in return for business ownership.