On the British television series Dragon's Den, entrepreneurs usually offer equity in exchange for investment.
Equity means an ownership stake in the company. A contestant might ask for a particular sum of money and offer a stated percentage of the business. If a Dragon accepts and the deal is completed, the investor receives ownership rights in return for capital and, often, advice or commercial assistance.
The negotiation is about more than the cash amount. Dragons assess the proposed valuation by comparing the requested investment with the percentage offered. They also examine sales, profit, intellectual property, debt, and the founder’s ability to grow the company.
Equity is different from a loan. A loan normally has to be repaid with agreed interest, while an equity investor accepts business risk in return for a potential share of future value. Offers shown on television may also remain subject to due diligence.