Private equity usually requires actual profits -- their plan usually is to take a profitable (or at least revenue-generating) company, cut costs and increase re

Private equity usually requires actual profits -- their plan usually is to take a profitable (or at least revenue-generating) company, cut costs and increase revenue by good management, then turn it out to another private equity firm or hold it and operate it for the income stream. Sometimes they'll spin out a company to take it public, but not at the same huge premiums that VCs want. You have to be a reasonably mature company for a private equity deal to make sense. They usually want steady income rather than the 10x growth that a VC pays for, and the valuations reflect that.