What type of funding is money invested in a business by another business or individuals in exchange for an ownership share?

The type of funding characterized by money invested in a business by another business or individuals in exchange for an ownership share is equity financing. This involves investors providing capital to a company in return for ownership equity, typically in the form of shares. Equity financing is significant because it not only supplies the necessary capital for business operations and growth but also entails sharing the risk and rewards of the business venture with the investors.

Venture capital, while it is a specific form of equity financing often associated with high-risk startups, does not capture the broader definition of equity financing since the latter encompasses all instances of raising capital through the sale of shares. Seed funding refers to the initial capital raised to start a company, which can also be a component of equity financing but is not the term that captures the ongoing concept of exchanging money for ownership in a business. Debt financing, on the other hand, refers to borrowing money that must be repaid over time and does not involve giving up any ownership stake in the company.