private equity vs venture capital
TRANSCRIPT
BY: SANDESH P4VP15MBA46
Venture capital Vs
Private equity
International Finance Corporation, defines venture capital“An 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 equity
E.g., Goldman Sachs, JPMorgan chase& co. etc.
vsPrivate Equity Venture Capital
STAGE
PE firms buy mature companies
VC’s invest mostly in early stage companies
1
COMPANY TYPES
2
VC’s are focused on technology, bio-tech and clean-tech companies.
PE firms buy companies across all
industries.
PERCENTAGE ACQUIRED
3
PE firms almost always buy 100% of a
company
VC only acquire a minority stake which is
less than 50%
INVESTMENT SIZE
PRIVATE EQUITY VENTURE CAPITAL
$100million to $10billion
Bellow $10 million
4
1 million = 10 lakh.1 billion = 100 crore.
STRUCTURE
PRIVATE EQUITY VENTURE CAPITAL
Use Only
Equity
Combination of
Equity + Debt
5
TIME HORIZON6
PRIVATE EQUITY VENTURE CAPITAL
TO6 10 TO4 7
EXIT AFTER
ROI7
PRIVATE EQUITY VENTURE CAPITAL
Depends on the inherentrisk of particular firm and
industry.
Many failures, some solid returns, a few
spectacular successes.
POINT OF DIFFERENCE:1. STAGE2. COMPANY TYPES3. PERCENTAGE ACQUIRED 4. INVESTMENT SIZE5. STRUCTURE6. TIME HORIZON7. ROI