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Startup investing is a subset of private equity investing. Pe includes many illiquid subcategories including real estate, LBOs, startup investing, even niche s

Startup investing is a subset of private equity investing. Pe includes many illiquid subcategories including real estate, LBOs, startup investing, even niche stuff like infrastructure investing

JumpCrisscross 6y ago
> Startup investing is a subset of private equity investing Not as the term is used in finance. Venture and PE are separate asset classes. Venture-like assets can become PE-like, in the same way private equity can become public equity. But PE is based on cash flows and leverage; VC is based on growth.
- Grimm1 6y ago
  No one said VC, PE most certainly does invest in startups with exactly that focus on cash flows and leverage. The ones I have experience with tend to look at "older startups" think something like a 7-year-old company that don't really have a hope of a large cash payout but is still viable as a business. It seems to be one transition path for a traditionally VC backed company to resemble a regular small business. I have personal experience with at least two startups that had undergone that experience and are still around right now.
- wtvanhest 6y ago
  Not according to the CFA Institute, or any number of other sources. LPs may incorrectly label PE and VC as separate subsets, but most large, institutional LPs will have PE, then separated by type. CFA is the best source, but there are so many others, including my professional experience at a major asset manager. https://www.cfainstitute.org/en/membership/professional-development/refresher-readings/2020/private-equity-valuation https://www.cfainstitute.org/en/membership/professional-deve... > Definitions of private equity differ, but in this reading we include the entire asset class of equity investments that are not quoted on stock markets. The private equity class stretches from venture capital (VC)—working with early stage companies that in many cases have no revenues but have potentially good ideas or technology—all the way through to large buyouts (leveraged buyout, or LBO) in which the private equity firm buys the entire company. In some cases, these companies might themselves be quoted on the stock market, and the private equity fund performs a public-to-private transaction thereby removing the entire company from the stock market.

Startup investing is a subset of private equity investing. Pe includes many illiquid subcategories including real estate, LBOs, startup investing, even niche stuff like infrastructure investing

JumpCrisscross 6y ago

> Startup investing is a subset of private equity investing Not as the term is used in finance. Venture and PE are separate asset classes. Venture-like assets can become PE-like, in the same way private equity can become public equity. But PE is based on cash flows and leverage; VC is based on growth.

Grimm1 6y ago
No one said VC, PE most certainly does invest in startups with exactly that focus on cash flows and leverage. The ones I have experience with tend to look at "older startups" think something like a 7-year-old company that don't really have a hope of a large cash payout but is still viable as a business. It seems to be one transition path for a traditionally VC backed company to resemble a regular small business. I have personal experience with at least two startups that had undergone that experience and are still around right now.
wtvanhest 6y ago
Not according to the CFA Institute, or any number of other sources. LPs may incorrectly label PE and VC as separate subsets, but most large, institutional LPs will have PE, then separated by type. CFA is the best source, but there are so many others, including my professional experience at a major asset manager. https://www.cfainstitute.org/en/membership/professional-development/refresher-readings/2020/private-equity-valuation https://www.cfainstitute.org/en/membership/professional-deve... > Definitions of private equity differ, but in this reading we include the entire asset class of equity investments that are not quoted on stock markets. The private equity class stretches from venture capital (VC)—working with early stage companies that in many cases have no revenues but have potentially good ideas or technology—all the way through to large buyouts (leveraged buyout, or LBO) in which the private equity firm buys the entire company. In some cases, these companies might themselves be quoted on the stock market, and the private equity fund performs a public-to-private transaction thereby removing the entire company from the stock market.