Private equity or venture capital. Let’s clarify
These terms are often confused, if not assimilated, but they identify distinct activities and operators.
Both refer to the investment activity in risk capital of a company.
However, venture capital refers to the financing of new companies, the so-called startups. It is therefore an investment with a high degree of risk, given that often you invest in idea and team more than in the company itself.
Private equity, on the other hand, is the investment in companies already present on the market for years.
Consequently, when we talk about Private Equity or Venture Capital Funds, we refer to institutional investors who choose to enter with minority or majority shareholdings in the company's capital, choosing between new companies or companies in subsequent years.
Both of them evaluate - to choose the right company;
the team, for experience and knowledge of the sector
the development and growth project.
the reference sector
in perspective, a good possibility of "exit strategy", that is, to resell its shares and capitalize on the investment.
A, research has shown that the presence of an institutional investor in risk capital allows higher levels of growth than other companies. A partner to be considered.
In another article we will discuss the reasons, pros and cons.