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.