Private Equity vs. Venture Capital

While both venture capital firms and private equity cash in exchange for equity positions in companies, is the highest award of when the investment is made. With the exception of turnaround investments, private equity firms tend to more established companies with a history of successful investment, and, preferably, the cash flow of reliable tent, to invest venture capital firms, with previous stage show a company's market presence less.

The distinctionbetween the terms used in venture capital and private equity above applies to the language spoken in the United States. That is, the United States, use the two terms, as if they were investing significantly different types of companies in various stages of growth. In Europe, however, the conditions of risk capital and private equity are somewhat interchangeable, is that British English term Venture Capital is used to describe a specific subset of the PE market, used. Therefore,Europe, when someone speaks of private equity may in fact be what someone would be in the United States applies a venture capital company to call.

Another point of potential semantic confusion is that private equity is also a term commonly used for people who invest real estate operating room. While the use of the term has in real estate, the same underlying financial importance, the global private equity real estate in general the full rangecompanies than those normally directly to businesses. There are some exceptions, as some investment firms to invest in businesses and homes, but tend to be much in the minority.

While chatting debate, Should we also note that companies direct investment in companies, often with different names, all of equal importance, including: PE firms, financial sponsors, investment firm, investment firm or buyoutCompany. Similarly, investment banks, often with a Leveraged Finance Group, which is often the same as the Financial Sponsors Group, which are often structured part of the Capital Markets Group. These can be a bit 'confusing, until someone says exactly who are different ways to say the same thing.