Want the money they lend to be repaid and seek some form of security that can be used to offset any losses in case of nonrepayment.They will tend to focus on the worst case scenario and the risk that would pose, worrying about what will happen if things go wrong. The terms of a loan will reflect the inherent risks of the enterprise, the cash available for repayment, the forms of security that are available and how risky a loan to the enterprise is considered relative to other loans made. Some lenders, such as CDFIs and foundations with PRI loan funds that have social or environmental missions, may also overlay these missions in assessing a loan.

Seek a return on investment, which may be a mix of financial and social return, commensurate with the risk they take. As the risk for equity investors is highest (if things go wrong, they are the last to be paid anything), they typically expect a higher return than lenders do, although in general they have a longer time horizon than lenders, and expect that some or all of their return will come when they exit the investment.

Equity investors look at historical performance as an indicator of the future, but they also focus on what an enterprise can reasonably achieve and what return it will provide, given the operating and financial structure. They may expect a say in the governance and the strategic direction of the enterprise, and will expect a return in line with that expected from comparable enterprises. If they perceive that they are investing at a riskier stage of the enterprise’s development, they will expect a higher return. Equity investors want assurances that the financial structure of the enterprise is adequate, and will want to evaluate the terms given to other funders to make sure they aren’t unduly burdensome to the enterprise.