{"id":2846,"date":"2020-03-23T17:49:49","date_gmt":"2020-03-23T17:49:49","guid":{"rendered":"http:\/\/localhost\/2020\/swoopMW20\/?post_type=knowledge-hub&#038;p=2846"},"modified":"2024-03-26T11:57:45","modified_gmt":"2024-03-26T11:57:45","slug":"private-equity","status":"publish","type":"knowledge-hub","link":"https:\/\/swoopfunding.com\/na\/knowledge-hub\/private-equity\/","title":{"rendered":"Private equity"},"content":{"rendered":"\n <div class=\"faq-accordion faq-accordion297\">\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading0297\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse0297\" aria-expanded=\"true\" aria-controls=\"collapse0\">\n What is private equity? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse0297\" class=\"collapse show\" aria-labelledby=\"heading0\" data-parent=\".faq-accordion297\">\n <div class=\"card-body\">\n <p>Private equity is a type of\u00a0<a href=\"https:\/\/swoopfunding.com\/na\/knowledge-hub\/equity-finance\/\">equity financing<\/a>\u00a0suitable for established private businesses. Private Equity funds give your business money in return for a large or controlling share in your business.<br data-rich-text-line-break=\"true\" \/><em>\u00a0<\/em><br data-rich-text-line-break=\"true\" \/>Both private equity (PE) and venture capital (VC) firms invest in businesses and grow them (usually for up to 5 years) in order to make \u2018above-market\u2019 returns when businesses are sold or listed (<a href=\"https:\/\/swoopfunding.com\/na\/knowledge-hub\/initial-public-offering-ipo\/\">IPO<\/a>).<br data-rich-text-line-break=\"true\" \/><br data-rich-text-line-break=\"true\" \/>The money managed by most VC and PE funds comes from institutional investors, e.g. large pension funds, insurance companies and sovereign wealth funds. These same institutions invest in public markets, bonds, property and infrastructure. From the institutions\u2019 point of view, investing in VC and PE funds is a key part of their overall investment portfolio.\u00a0<br data-rich-text-line-break=\"true\" \/><br data-rich-text-line-break=\"true\" \/>Those are the similarities. But there are major differences in the way that VC and PE firms do business.<br data-rich-text-line-break=\"true\" \/><br data-rich-text-line-break=\"true\" \/>Put simply, PE and VC firms buy different types and sizes of businesses, invest different amounts of money, and claim different percentages of equity in their investee businesses.<br data-rich-text-line-break=\"true\" \/>\u00a0<br data-rich-text-line-break=\"true\" \/>VC firms tend to invest up upwards of R500,000 in high-growth startups and early-stage businesses that need capital and business expertise to take them to the next level, whereas PE firms prefer to invest much larger amounts (R5m to hundreds of millions of rands) in established businesses that require a cash injection or a new strategy to move them forwards.\u00a0<br data-rich-text-line-break=\"true\" \/><br data-rich-text-line-break=\"true\" \/>The stake a VC fund takes will depend on how it values your business but will always be a minority stake. A PE firm, on the other hand, will take a larger or majority stake in a business \u2013 or take complete control in the case of a buyout or buy-in.<br data-rich-text-line-break=\"true\" \/><br data-rich-text-line-break=\"true\" \/>In summary, a PE firm might aim to:<\/p>\n<ul>\n<li>buy out the founder of your business<\/li>\n<li>cash out your existing investors<\/li>\n<li>provide capital for expansion<\/li>\n<li>provide recapitalisation (if your business is struggling)<\/li>\n<li>buy your business outright<\/li>\n<li>arrange a leveraged buyout \u2013 in other words borrow extra money to boost its buying power, using the assets of the acquisition target (i.e. your business assets) as collateral.<\/li>\n<\/ul>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading1297\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse1297\" aria-expanded=\"true\" aria-controls=\"collapse1\">\n Have you also considered? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse1297\" class=\"collapse \" aria-labelledby=\"heading1\" data-parent=\".faq-accordion297\">\n <div class=\"card-body\">\n <ul>\n<li><a href=\"https:\/\/swoopfunding.com\/na\/knowledge-hub\/business-angels\/\">Business angels<\/a> &#8211; Business angels are private individuals who are prepared to put their own money into startup or early-stage businesses in exchange for a share of the company\u2019s equity (i.e. equity finance). Angels may invest on their own or as part of an angel network. Typically, they are experienced entrepreneurs and, in addition to money, they bring their own skills, expertise and contacts to the table.<\/li>\n<\/ul>\n<ul>\n<li><a href=\"https:\/\/swoopfunding.com\/na\/knowledge-hub\/venture-capital\/\">Venture capital<\/a> &#8211;\u00a0Venture capital is financing given to startups\u00a0and early-stage businesses. Venture capital funds look to invest larger sums of money than\u00a0<a href=\"https:\/\/swoopfunding.com\/na\/knowledge-hub\/business-angels\/\">business angels<\/a> \u2013 typically more than R500,000 \u2013 in return for an equity stake. Venture capital is most suited to high-growth businesses with long-term growth potential, i.e. those destined for sale or public listing (IPO).<br \/>\n<br data-rich-text-line-break=\"true\" \/><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/na\/knowledge-hub\/equity-crowdfunding\/\">Equity crowdfunding<\/a> &#8211;\u00a0Equity crowdfunding is a type of\u00a0<a href=\"https:\/\/swoopfunding.com\/na\/knowledge-hub\/equity-finance\/\">equity finance<\/a>\u00a0whereby people (\u2018the crowd\u2019) invest in an early-stage unlisted company, in exchange for shares (equity) in that company. Individual investors thus become shareholders and stand to profit if the business does well \u2013 they might also lose some or all of their investment. Equity crowdfunding usually takes place over an online platform.<br data-rich-text-line-break=\"true\" \/><br data-rich-text-line-break=\"true\" \/><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/na\/knowledge-hub\/initial-public-offering-ipo\/\">Initial public offering<\/a>\u00a0(IPO).<\/li>\n<\/ul>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n \n <script type=\"application\/ld+json\">\n    {\n        \"@context\": \"https:\/\/schema.org\",\n        \"@type\": \"FAQPage\",\n        \"mainEntity\": [\n                                {\n                \"@type\": \"Question\",\n                \"name\": \"What is private equity?\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"Private equity is a type of\u00a0equity financing\u00a0suitable for established private businesses. Private Equity funds give your business money in return for a large or controlling share in your business.\u00a0Both private equity (PE) and venture capital (VC) firms invest in businesses and grow them (usually for up to 5 years) in order to make \u2018above-market\u2019 returns when businesses are sold or listed (IPO).The money managed by most VC and PE funds comes from institutional investors, e.g. large pension funds, insurance companies and sovereign wealth funds. These same institutions invest in public markets, bonds, property and infrastructure. From the institutions\u2019 point of view, investing in VC and PE funds is a key part of their overall investment portfolio.\u00a0Those are the similarities. But there are major differences in the way that VC and PE firms do business.Put simply, PE and VC firms buy different types and sizes of businesses, invest different amounts of money, and claim different percentages of equity in their investee businesses.\u00a0VC firms tend to invest up upwards of R500,000 in high-growth startups and early-stage businesses that need capital and business expertise to take them to the next level, whereas PE firms prefer to invest much larger amounts (R5m to hundreds of millions of rands) in established businesses that require a cash injection or a new strategy to move them forwards.\u00a0The stake a VC fund takes will depend on how it values your business but will always be a minority stake. A PE firm, on the other hand, will take a larger or majority stake in a business \u2013 or take complete control in the case of a buyout or buy-in.In summary, a PE firm might aim to:  buy out the founder of your business cash out your existing investors provide capital for expansion provide recapitalisation (if your business is struggling) buy your business outright arrange a leveraged buyout \u2013 in other words borrow extra money to boost its buying power, using the assets of the acquisition target (i.e. your business assets) as collateral. \"\n                }\n            },                                {\n                \"@type\": \"Question\",\n                \"name\": \"Have you also considered?\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \" Business angels &#8211; Business angels are private individuals who are prepared to put their own money into startup or early-stage businesses in exchange for a share of the company\u2019s equity (i.e. equity finance). Angels may invest on their own or as part of an angel network. Typically, they are experienced entrepreneurs and, in addition to money, they bring their own skills, expertise and contacts to the table.   Venture capital &#8211;\u00a0Venture capital is financing given to startups\u00a0and early-stage businesses. Venture capital funds look to invest larger sums of money than\u00a0business angels \u2013 typically more than R500,000 \u2013 in return for an equity stake. Venture capital is most suited to high-growth businesses with long-term growth potential, i.e. those destined for sale or public listing (IPO).  Equity crowdfunding &#8211;\u00a0Equity crowdfunding is a type of\u00a0equity finance\u00a0whereby people (\u2018the crowd\u2019) invest in an early-stage unlisted company, in exchange for shares (equity) in that company. Individual investors thus become shareholders and stand to profit if the business does well \u2013 they might also lose some or all of their investment. Equity crowdfunding usually takes place over an online platform. Initial public offering\u00a0(IPO). \"\n                }\n            }          ]\n    }\n    <\/script>\n \n","protected":false},"excerpt":{"rendered":"","protected":false},"author":84,"menu_order":24,"template":"","segment":[299],"class_list":["post-2846","knowledge-hub","type-knowledge-hub","status-publish","hentry","segment-equity-finance"],"acf":[],"featured_image_urls_v2":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","image_blog":"","image_podcast":"","image_banking":"","image_blog_internal":"","image_blog_medium":"","image_single_banking":""},"post_excerpt_stackable_v2":"<p>What is private equity? Private equity is a type of\u00a0equity financing\u00a0suitable for established private businesses. Private Equity funds give your business money in return for a large or controlling share in your business.\u00a0Both private equity (PE) and venture capital (VC) firms invest in businesses and grow them (usually for up to 5 years) in order to make \u2018above-market\u2019 returns when businesses are sold or listed (IPO).The money managed by most VC and PE funds comes from institutional investors, e.g. large pension funds, insurance companies and sovereign wealth funds. These same institutions invest in public markets, bonds, property and infrastructure. From&hellip;<\/p>\n","category_list_v2":"","author_info_v2":{"name":"hanne","url":"https:\/\/swoopfunding.com\/na\/author\/hanne\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/na\/wp-json\/wp\/v2\/knowledge-hub\/2846","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swoopfunding.com\/na\/wp-json\/wp\/v2\/knowledge-hub"}],"about":[{"href":"https:\/\/swoopfunding.com\/na\/wp-json\/wp\/v2\/types\/knowledge-hub"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/na\/wp-json\/wp\/v2\/users\/84"}],"version-history":[{"count":0,"href":"https:\/\/swoopfunding.com\/na\/wp-json\/wp\/v2\/knowledge-hub\/2846\/revisions"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/na\/wp-json\/wp\/v2\/media?parent=2846"}],"wp:term":[{"taxonomy":"segment","embeddable":true,"href":"https:\/\/swoopfunding.com\/na\/wp-json\/wp\/v2\/segment?post=2846"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}