Funding

Funding is the process of raising capital to support a company's financial needs. This capital can be used for a wide range of purposes, including launching the business, covering operating expenses, investing in capital expenditures, or fueling growth and expansion. Companies typically secure funding through two primary channels: debt, where money is borrowed and must be repaid with interest, and equity, where capital is exchanged for an ownership stake in the company.

Effective financial planning requires careful management of funds to ensure the business has sufficient liquidity to meet its obligations and pursue strategic goals. Funding events are recorded on the balance sheet and directly impact the cash flow statement, influencing key metrics like cash burn rate and runway. The choice between debt and equity financing has significant implications for a company's capital structure, control, and valuation.