Venture capitalists invest in growth
What is private equity and venture capital?
Private equity and venture capital is finance provided in return for an equity stake in potentially high-growth companies. It is behind some of the UK's best-known and most innovative businesses such as Alliance Boots, Centre Parcs, Odeon & UCI Cinemas, Pizza Express and Spotify.
Private equity firms look to invest majority stakes in underperforming companies that have the potential for high growth. Growth in the businesses is delivered by working with the company's management team to improve performance and strategic direction, making investments.
Venture capital firms, in contrast, invest in companies in the seed (concept), start-up (within three years of the company's establishment) and early stages of development. Venture capitalists invest to develop new products.
Private equity and venture capital firms are long-term investors, typically investing in companies for around five-to-seven years.
This means a commitment to building lasting and sustainable value in the businesses they invest in.
Private equity and venture capital firms raise funds from pension funds and other sources.