private equity vs venture capital

11
BY: SANDESH P 4VP15MBA46 Venture capital Vs Private equity

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Page 1: Private equity vs venture capital

BY: SANDESH P4VP15MBA46

Venture capital Vs

Private equity

Page 2: Private equity vs venture capital

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.

Page 3: Private equity vs venture capital

vsPrivate Equity Venture Capital

STAGE

PE firms buy mature companies

VC’s invest mostly in early stage companies

1

Page 4: Private equity vs venture capital

COMPANY TYPES

2

VC’s are focused on technology, bio-tech and clean-tech companies.

PE firms buy companies across all

industries.

Page 5: Private equity vs venture capital

PERCENTAGE ACQUIRED

3

PE firms almost always buy 100% of a

company

VC only acquire a minority stake which is

less than 50%

Page 6: Private equity vs venture capital

INVESTMENT SIZE

PRIVATE EQUITY VENTURE CAPITAL

$100million to $10billion

Bellow $10 million

4

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

Page 7: Private equity vs venture capital

STRUCTURE

PRIVATE EQUITY VENTURE CAPITAL

Use Only

Equity

Combination of

Equity + Debt

5

Page 8: Private equity vs venture capital

TIME HORIZON6

PRIVATE EQUITY VENTURE CAPITAL

TO6 10 TO4 7

EXIT AFTER

Page 9: Private equity vs venture capital

ROI7

PRIVATE EQUITY VENTURE CAPITAL

Depends on the inherentrisk of particular firm and

industry.

Many failures, some solid returns, a few

spectacular successes.

Page 10: Private equity vs venture capital

POINT OF DIFFERENCE:1. STAGE2. COMPANY TYPES3. PERCENTAGE ACQUIRED 4. INVESTMENT SIZE5. STRUCTURE6. TIME HORIZON7. ROI

Page 11: Private equity vs venture capital