The precise interest rate is determined based on market practices: it depends on how risky it is, its duration, and so on. Usually, the riskier the offering, the higher the interest rate.
Equity financing means selling the shares of your company to investors. As a result of this process, they become the company co-owners and participate in share capital. When searching for equity financing, you need to determine which particular percentage you should give to investors. There are two most common ways to do it.
Firstly, by evaluating the company's assets: let's say it has $10 million worth of assets and attracts $10 million financings. As a result, this company is now worth $20 million. As the second $10 million was brought here by investors, they should receive 50% of shares.
Alternatively, you can come up with a valuation for a company by adding all its future income. If, for example, a sum of all the future cash flows equals $20 million while investors put in $10 million, it all comes down to 50% shares as well. Notice that when evaluating the future cash flows, you need to discount them, considering that money today is more valuable than money in the future. You can learn more about it in our video “How investors assess your corporate finance. Private placement, equity crowdfunding, IPO, STO