Private Equity Firms

Companies that raise outside capital to invest in later-stage businesses, often funding deals of millions of dollars.

Private equity (PE) firms invest directly in private companies. In more developed markets there are quite clear distinctions between Venture Capital and Private Equity however on the continent the lines are not as clearly defined. They tend to focus on companies that are more mature than those in VCs’ remit. PE firms are often structured as a limited partnership, with institutional investors and/or HNWIs providing funds for partners to manage. As PE firms invest in more mature companies, and sometimes acquire a 100% stake in these companies, they tend to invest much larger amounts than VCs ($2 million and above). That makes them an imperfect fit for smaller firms/companies.

Private equity is a catch-all term that captures many types of firms; venture capital, for example, is a subset of PE. As PE funds tend to make large equity investments, they typically get fairly involved in the management of the companies. They usually focus on larger, more established companies that they feel can improve operations and become more profitable.