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Venture 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 (tho
by rmah 7y ago
Venture 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.
- CPLX 7y agoIndeed. They do slightly different kinds of questionable financial engineering.
- pmart123 7y agoWhile the first part of your post is correct, they operate extremely differently.