Equity
Noun
US
/ˈɛkwəti/
UK
/ˈɛkwəti/
US
/ˈɛkwəti/
UK
/ˈɛkwəti/
The value of ownership interest in an asset after deducting liabilities; in business, the ownership stake held by shareholders
If your home is worth $500,000 and you owe $300,000 on the mortgage, your home equity is $200,000.
Startup founders give up equity when raising venture capital. A Series A round might require giving 20-25% equity to investors in exchange for growth funding.
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When Sequoia Capital invested $12.5 million in WhatsApp for a 20% equity stake, it seemed modest. When Facebook acquired WhatsApp for $19 billion in 2014, Sequoia's equity was worth approximately $3 billion — a 240x return.
Used across various IT applications and business environments.
Practical application in IT systems and business operations.