If you're early stage and accepting term sheets, you may want to read this. Signing a term sheet just to get investment could end up in disaster, remember, you're married to these guys when you ink that deal. Check it out-
http://www.techcrunch.com/2009/03/22/the-nasty-exploding-term-sheet/

Debt - Basically a loan with an agreement that you will pay it back over an agreed upon time period. From a founders prospective debt is nice because the lender has no ownership or liberties over your business. Once the debt is paid in full, the relationship with the lender can be terminated. Debt financing usually occurs through banks and the small business administration.
It is important to know that the interest on debt financing is tax deductible.
Be warned though, carrying to much debt can make a you a high risk investment and therefore can put you in a sticky situation when you go to get additional funding.

Equity - Is nice because as long as your business is making a profit, your lenders will get repaid. With the aid of the investors, your business becomes for credible and may attract more attention from lending networks.
Some would say that money is money and that it is spent the same way regardless of the source, but others would argue that equity deals should be done between the right partners. When an equity deal is on the table, you have entered into a relationship where you will be giving up complete control of your business and it is important that your investors believe in your vision and are confident that you can manage their money and your business in harmony. Otherwise you may find yourself fighting your competition and your investors at the same time- not a good situation to be in.

If you cannot identify these core elements, it's time to go back the drawing board and rethink your approach.

1) Purpose? (a.k.a What problem are you solving)

2) Market Size? (make sure you have a market that will pay for your service/product)

3) Focus (Tons of features is a great option to have but that won't clearly define your core competency, what is your primary mission? always keep your eye on the ball)

4) A Real Solution (This is a lot like focus, what's the one thing you will do that will change your customers experience or life)

5) Outside the Box (If you're making another "Me Too" site and you're starting from scratch, it's going to be a bumpy road ahead, give yourself a distinct advantage. What can you do that no one else can)

6) Team Chemistry ( You may have the most brilliant minds around, but if you can't work together , you're just wheels without a car )

7) David vs. Goliath ( If throwing stones at your competition isn't working, you have the distinct advantage of regrouping, refocusing, and redirecting. Agility is on your side when going head to head against a super power)

8) Hyper-Miling (by keeping resources well managed and running lean, you'll gain investor trust and efficiency. Spend Wisely!)

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