Compare between private equity and venture capital.


The major differences between private equity and venture capital are as follows −

Private equity

  • Investments made in those companies which are not publicly listed on any stock exchange.

  • Buys from mature and public companies.

  • Focus will be on all kind of industries.

  • Want to acquire almost full stake of the company in an LBO.

  • Combination structure (debt + equity).

  • Investments made in few companies.

  • Mainly focus on corporate governance.

  • Less risk involved.

Venture capital

  • Financing small business.

  • Invest mostly in start-up or early stage companies.

  • Focus on technology, biotech and clean tech companies.

  • Acquires minority stake (<50%) of the company.

  • Only equity structure.

  • Investments made in large number of companies.

  • Mainly focus on management capability.

  • Very high risk involved.

Updated on: 24-Jul-2020

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