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> I wouldn't get involved with private equity firms The website you posted this sentence on is owned by a private equity firm.
by CPLX 7y ago
> I wouldn't get involved with private equity firms
The website you posted this sentence on is owned by a private equity firm.
- C1sc0cat 7y agoY combinator is more the VC model that the PE one.
- elliekelly 7y agoVC is Private Equity. All thumbs are fingers but not all fingers are thumbs.
- mcv 7y agoMy son has lately been claiming that the thumb is not a finger, and he can explain why. I'm not sure who to believe anymore.
- severine 7y agohttps://www.lexico.com/en/explore/is-a-thumb-a-finger https://www.lexico.com/en/explore/is-a-thumb-a-finger
- C1sc0cat 7y agoNot in the way intended y combinator doesn't do MBO's or dodgy debt loading as far as I know
- elliekelly 7y agoIt sounds like you're conflating asset class (PE) with capital structure (how asset ownership is financed). Private equity is just an investment of capital in a non-public company in exchange for equity. YC makes capital investments in non-public companies in exchange for equity. The structure of PE deals can vary from the simple cash investment in exchange for company stock all the way up to incredibly complex leveraged buyouts and everything you could imagine in between.
- StevePerkins 7y agoAs an investor, paying them to manage my money, silly.
- barry-cotter 7y agoThe venture capital economic model is very different from that of private equity. VC makes relatively small investments in many extremely risky firms, hoping for a few massive blowout hits which return the entire fund by themselves. PE buys firms with proven economic models, cuts costs and tries to improve management in some form, whether by bringing in real estate expertise for franchises (think Starbucks or McDonald’s) or doing bog standard MBA stuff like KPIs and improving staffing, hiring or internal IT. At the high end of VC you get some overlap with PE, like SoftBank investing $X00 million in hot “startups” but PE does not chase 100x returns on investment. They’re in the business of taking a company worth $100 million and turning it into one worth $500 million.
- rmah 7y agoVenture Capital is a strict subset of the Private Equity industry. They are not outside it, they are deep within it. PE firms do exactly what VC firms do (though often with different sorts of businesses), plus a lot more.
- notfromhere 7y agoVCs don't do the same kinds of questionable financial engineering that PEs do.
- formercoder 7y agoOnly because they can't. Leverage requires steady cash flows, fixed assets, etc. If VCs could increase their potential return while also increasing financial risk to their portfolio, they absolutely would. Across private equity there is a spectrum from small cap to large cap with increasing leverage. The small cap funds do a combination of the leverage tricks available to PE investors as well as the deal structure tricks available to VCs (preferred, etc).
- notfromhere 7y agoThey can't so they don't. That's why its irrelevant.
- theobeers 7y agoThis is about LBO, not VC. It’s mentioned in the subtitle of the article and in the first paragraph.