Deal Structures
Equity
An "equity" offering is where the company sells partial ownership in the company (via the sale of stock or a membership unit) to raise capital. Equity offerings are preferred by early stage companies because there is no set repayment schedule or debt service payments - the investors profit when the company profits.
Debt
A "debt" offering is where the company raises debt financing by selling a note instrument to investors with a set annual rate of return and a maturity date that dictates when the funds will be paid back to investors in full. A debt offering functions much like a business loan except instead of a bank providing the financing it is a group of investors lending funds to the company.

Debt with Equity Kicker
This is a popular hybrid structure blending Debt with Equity.  An equity kicker is a type of equity incentive typically issued in combination with privately placed subordinated or mezzanine debt to improve the return for subordinated debtholders. Equity kickers can have a convertible feature exchangeable for shares or warrants to purchase shares at a set price at some point in the future.

Participating Preferred 
A participating preferred stock is a type of preferred stock that gives the holder the right to receive dividends equal to the normally specified rate that preferred dividends receive as well as an additional dividend based on some predetermined condition.

The additional dividend paid to preferred shareholders is commonly structured to be paid only if the amount of dividends that common shareholders receive exceeds a specified per-share amount.

Furthermore, in the event of liquidation, participating preferred shareholders can also have the right to receive the stock's purchasing price back as well as a pro-rata share of any remaining proceeds that the common shareholders receive.

Royalty Contract
Revenue, Royalty or profit sharing can be a right in either a debt or equity security that provides investors with a right to a percentage of the company’s gross revenues (or profits) for a predetermined period of
time.

Convertible
This is a loan of any type (senior, secured, subordinated, etc.) that has a feature enabling the debtholders to convert the note into a stated form of equity at a predetermined ratio. The conversion may be at the noteholders’ option or it may be a mandatory event based upon some agreed upon trigger (e.g. filing for an IPO, a sale or merger, etc.).


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