Equity capital refers to the funds that are raised by a company through the issuance of shares or stocks. This type of funding is provided by investors who purchase these shares in exchange for an ownership stake in the company. The amount of equity capital that a company can raise depends on factors such as its financial performance, growth potential and market valuation. Equity financing allows companies to grow their business without taking on debt or incurring interest expenses. In return for providing equity capital, shareholders typically expect a portion of the company's profits in the form of dividends, as well as appreciation in the value of their shares over time.