private equity vs venture capital

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BY: SANDESH P4VP15MBA46Venture capital Vs Private equity

International Finance Corporation, defines venture capitalAn equity or equity featured capital seeking investment in new companies, new products, new process or new services, that offer the potential of high return on investment.E.g., Accel Partners, Atlas venture etc.

Private equity is capital that is not noted on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity. Institutional and retail investors provide the capital for private equityE.g., Goldman Sachs, JPMorgan chase& co. etc.

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vsPrivate EquityVenture CapitalSTAGEPE firms buy mature companies VCs invest mostly in early stage companies1

Company types2VCs are focused on technology, bio-tech and clean-tech companies. PE firms buy companies across all industries.

Percentage acquired3PE firms almost always buy 100% of a companyVC only acquire a minority stake which is less than 50%

Investment sizePRIVATE EQUITYVENTURE CAPITAL$100million to $10billionBellow $10 million4

1 million = 10 lakh.1 billion = 100 crore.

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structurePRIVATE EQUITYVENTURE CAPITAL5

Time horizon6PRIVATE EQUITYVENTURE CAPITALEXIT AFTER

ROI7PRIVATE EQUITYVENTURE CAPITALDepends on the inherentrisk of particular firm andindustry. Many failures, some solid returns, a few spectacular successes.

POINT OF DIFFERENCE:STAGECOMPANY TYPESPERCENTAGE ACQUIRED INVESTMENT SIZESTRUCTURETIME HORIZONROI

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