Private Equity vs Venture Capital
| # | Private Equity | Venture Capital |
| 1 | Invests in early-stage startups/companies | Invests in existing companies |
| 2 | Invests to gain full control of the company | Control is split with founders, angel investors, and other stakeholders |
| 3 | Invests across different industries | Focuses on tech startups |
| 4 | Investment is through equity and debt | Investment is solely based on equity |
| 5 | Focuses investments in a small number of companies | Invests across a large number of companies to supplement cases of losses and profits |
| 6 | Less likely to take risks | Takes informed risks on startups |
What is private equity?
Private equity is a kind of investment where high-net-worth individuals and firms invest in private companies that are under financial strain. It could also be in public companies but they’re delisted from the stock exchange market.
Private equity firms typically seek to invest in companies that have growth potential or are undervalued, with the aim of improving the company’s operations, financial performance, and overall value over a period of several years. They may take an active role in managing the company, providing guidance, and making strategic decisions.
Read more: What Is Private Equity?
Examples of Private Equity firms
- The Blackstone Group: The Blackstone Group is a global private equity firm that was founded in 1985. It has invested in a large portfolio of companies such as Hilton Hotels, Bumble, and Merlin Entertainments.
- The Carlyle Group: The Carlyle Group was founded in 1987. It has invested in many successful companies such as Dunkin’ Brands, Beats Electronics, and Hertz.
- KKR & Co. Inc.: Founded in 1976, KKR & Co. Inc. has invested in many successful companies such as GoDaddy, Dollar General, etc
- TPG Capital: TPG Capital is a private equity firm that was founded in 1992. It has invested in companies such as Airbnb, Uber, and McAfee.
- Apollo Global Management: Apollo Global Management was founded in 1990 and has invested in a wide range of industries—media, healthcare, and financial services and in a large portfolio of companies such as Caesars Entertainment, ADT, and CareerBuilder.
Pros and Cons of Private Equity
| Pros | Cons |
| They usually bring more funds. | Company owners give up control. |
| They offer experience and expertise to aid company growth. | Possibility of selling the company. |
| Investments cuts across industries. | Cutting costs could involve staff layoffs. |
What is venture capital?
Venture capital is an investment in new startups/companies by individuals or firms. It mainly focuses on companies that are just starting out with a high potential to grow.
Venture capital firms invest in companies that have innovative products, technologies, or business models, with the potential to disrupt existing markets or create new ones. They look for companies with high growth potential, large addressable markets, and a strong team with a clear vision for the future of the company.
Examples of Venture Capital firms
- Sequoia Capital: Founded in 1972, Sequoia Capital is one of the oldest and most successful venture capital firms in Silicon Valley. It has invested in many successful tech companies such as Apple, Google, PayPal, and Airbnb.
- Accel: Accel is a global venture capital firm that has invested in companies such as Facebook, Dropbox, Slack, and Spotify. It was founded in 1983.
- Andreessen Horowitz: Founded by tech industry veterans Marc Andreessen and Ben Horowitz in 2009, Andreessen Horowitz has invested in companies such as Airbnb, Lyft, Pinterest, and Slack.
- Kleiner Perkins: Kleiner Perkins is a well-established venture capital firm that has been investing in innovative companies since 1972. It has backed huge tech companies such as Google, Amazon, and Genentech.
- Greylock Partners: Greylock Partners is a venture capital firm that has invested in companies such as LinkedIn, Airbnb, and Facebook. It was founded in 1965.
Pros and Cons of Venture Capital
| Pros | Cons |
| Access to a network of key players in the industry. | Funds might not be enough |
| No obligation to repay the investment. | Venture capitalists are only interested in companies with the potential to disrupt the market hence there’s stiffer competition |
| Company owners still have a level of control. | Profit is not so high compared to private equity |
Similarities between private equity and venture capital
- They both invest in companies for profit
- Give business owners funds to grow their business
- They’re both considered alternative funding sources.
Is venture capital riskier than private equity?
Venture capital is generally considered riskier than private equity, as it involves investment in early-stage companies that have a high likelihood of failure. However, private equity can also carry significant risk, as they invest in established companies that are facing difficult market conditions.
What makes more money: private equity or venture capital?
Whichever makes more money depends on the amount invested and the turnout of such investments. But since we’ve learned that private equity investments usually have more funds, it is safe to say that private equity churn more profit than venture capital on average.
Bottom Line
Private equity and venture capital are both important forms of investment that have the potential to provide significant returns for investors. While private equity focuses on more established companies and may involve a greater level of risk due to the size of the investments, venture capital is known for its focus on early-stage companies with high growth potential.
Ultimately, the decision to invest in private equity or venture capital will depend on an investor’s risk tolerance, investment goals, and the opportunities available in the market.
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Thanks for this.
My pleasure ?
Not bad, but this isn’t extensive enough, it doesn’t contain how many percent does each Mutual fund pay and does investing in higher risk mutual funds bring higher returns, I’d appreciate if an article of this nature is published, thanks
I agree with you
??
Hi Ebubechukwu, every month on the blog, we do a roundup of top-performing mutual funds with all the details you need. It’s called “Market Slice”. In addition, we have a long list of articles on mutual funds that you will find most helpful. You can find all these here: https://cowrywise.com/blog/?s=mutual+funds
Information is helpful
I agree with you. And what’s the minimum amount you can invest with
Thank you I initiated a 10k mutual investment today when are you going get it started
I understand it thanks
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I understand very well but what’s the duration in which I can invest?
There’s none, strictly speaking, but for you to reap the benefits of compounding, I’d recommend that you think long term – years, not months.
Make sense. I now understand. Make I go teach person son too…
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I understand mutual funds a lot better now
Uhm…
How does the interest add up?
You didn’t include that part.
Hi Solomon, I wrote a very detailed post on that. You can check it out here https://cowrywise.com/blog/mutual-fund-returns/
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Anytime!
I don’t understand?
Hi Peter, please what part isn’t clear? I’d be happy to clarify.
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Thanks it was a nice breakdown
My pleasure ?
I understand it so well. How do I start investing in mutual fund? Can I start with the little fund I have in the celery fund? Please teach and direct me.
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I know a little more about mutual funds now
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Thanks for the detailed information and illustrations in the article. I now understand Mutual Fund better. I will take decision very soon by investing.
Great! The time to take the decision is now ?
How much can I use to invest in mutual.
I understand mutual funds better now.
Happy to hear!
You can start with any amount you have at the moment!
Thank you very much!
I now understand mutual funds better
My pleasure!
Thank you very much for the great insight on Mutual funds. I now understand better but I have a question.
What is the difference between mutual fund and Investment/Saving plan in a insurance or assurance company
Great question. I’m guessing you now understand mutual funds, so I’d just put this side-by-side.
At a basic level, insurance companies typically offer products that are hinged on specific events – death, damage, retirement etc. So savings products from insurance companies are similar to pension funds, where you make a contribution over a period of time and after that period you begin to get claims on a monthly or yearly basis depending on your contract.
Can you tell the difference now?
I understand better now. But do I have a say in the kind of company my money will be invested?
Okay. Thanks Ope.
But what determines the interest?
Hey Marvelous, I broke this down in this post- https://cowrywise.com/blog/mutual-fund-returns/
I’m sure you’d find it helpful in answering your question ?
Thanks Ope!
I understand mutual funds a lot better now! ☺️
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Wao! Very Interesting….. I really understand it all…. Thanks Ope
You’re welcome!
I understand mutual funds better now
You’re welcome!
This is a more detailed explanation on mutual fund but your start up requirements is my problem.
I understand mutual funds better now. Thanks
Happy to hear this, Taofik ?
Uhmm Ope in my mind we are already gees ?
Buh i need some answers ..
Been trying to save in dollars since for a while now
But I’m confused ?care to put me through?
Theo my G ??
Your best bet would be to take advantage of dollar mutual funds. You can find out everything you need to know here: https://cowrywise.com/blog/invest-in-dollar-mutual-fund/
Thanks a lot for ur help with this info looking forward to knowing more about mutual fund
I understand mutual funds better Now.
Great ?
I understand a lot better now. Thank you.
However, some questions:
1. Is it possible I lose all my money or run at a loss on mutual funds? Or is it a situation where, as long as I leave it long enough, I’ll bet my money back?
2. Also, can I invest in different level risks, e.g aggressive and balanced, at the same time?
I hope I don’t miss the answers.
Thank you.
Great!
1. Chances of losing all your money are quite slim, but, I’d advise that you invest based on your risk appetite because no investment, however safe, is without risk. In terms of long term investing, compounding really helps.
2. Yes, you can invest in funds across board.
I Understand a little bit better..
but one question I have is when we say ‘low risk in loosing all your capital’. Does it mean it is possible to loose all the money one used to save in mutual funds. Or just the interest would be lost?
Chances of losing all your money are quite slim, but yes, you may lose some of your capital in some cases.
Thanks for the article. Self explanatory
You’re welcome
I understand but how many days will it take for the investment to return
Thank you much much. This was really helpful.
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Thanks a lot ope
I understand it now and I will make sure people around me do this
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Thank you!
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?
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Thank you so much. I now understand what a mutual fund is.
You’re welcome!
What happens when the fund manager ran into a loss??
I just want to be sure
There are policies set by the government to protect users, and “customers” of these fund managers, but it only covers those who use licenced management companies. Guess what? Cowrywise has a SEC (Securities & Exchange Comission) licence in the fund/portfolio management category, so you can go to sleep knowing your money is safe ???
Okay,I will try
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I really understand mutual funds much better now with these ice cream illustration. The best presentation I’ve ever heard on investment
Thanks…this was good for starters
I understand mutual funds now. The breakdown was amazing. I’ve invested in mutual funds before using the app but honestly, I was just investing without a clue because I trust you all but knowing all this, I get it now and I’m definitely going to be more consistent with the investments. Great one Ope
Exactly what I did earlier today… I merely just invested because I believe in the visions and word of mouth from the many people using the platform. ?
This article didn’t state the percentage you’ll be earning when you invest in mutual funds.
I know what mutual fund is about now.
Thank you
Yea that was helpful
Well, I really hope to understand mutual fund more as my investments blossom.
Am new in this ,the bottom line for me is that Mutual funds will help me grow my money while I relax and watch and pray.
Thanks alot ope,I understand better now..
Thank you . I understand mutual funds now.
I understand better. Thanks
It is quite informative.
I understand mutual funds so much better now…nice one, I like ur explanation.
I totally understand better now..it really pays to read through.
Nice one,but if one what’s to quit before the due time, what is the process please
Sure, I understand better now… I already started investing by the way and it feels so great! ?
Is the interest rate every year only??
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After transferring money for investments, what follows?
Thanks so much for the enlightenment, I clearly understand.
These are my little questions:
✓ if I start my investment with N50,000 (for in stance), do I have to be paying the N50,000 every month ?
✓ when exactly will the returns be paid? Annually or Quarterly?
Thanking you as I await your response
Thanks for the explanation. I will make investing in mutual funds my next point of call.
Great to hear that!
Hi Ope, is there any form of cash out in mutual fund investment?
Hi Femi, could you please rephrase your question so I can understand you better?
I believe what Femi is trying to say is, at the end of the mutual fund investment, will there be any money paid to we the owner of the investment? Is it possible to withdraw cash?
Yes i really understand,,,.
Thanks a lot,,
You’re welcome!
I understand mutual fund now
Happy to hear that!
Thank you for this explanation, I think I’m ready to start investing in Mutual funds.
Great to hear! You can start by signing up here http://cwry.se/blog_signup. After you have signed up, this video has all the steps you need to get started: https://youtu.be/1CAJplBSpUw
I understand mutual funds better now.
While going through the write-up, I discovered some investments under the “conservative” category have a reduction in the returns over the years. Please can you help explain the meaning of those trends?
Now I understand what mutual fund investment really means.
Thank you for the update.
I will give it a try soon
Well explained. Can I get a phone number for direct contact with any of the cowrywise agent?
The lessons are educative. I am already giving it a trial with Mango savings. Thanks.
Thanks alot. Now I understand.
I understand mutual funds better now, thank you.
I understand mutual funds a lot better now
I understand mutual funds better. What I do not understand is what to do when your investment is “free falling” – losing money. It would be helpful of you do an article on that, Ope. Another thing you could do is to do an article on what to look out for when shopping for a mutual fund manager or mutual fund asset. Thank you for all you do, Ope. Happy 2022!
Thanks for the suggestions! I’ll definitely consider this.
This article was really helpful and educating. I now better understand mutual funds
It was helpful but I will like your opinion or let me say guidance of each funds, like u made an example with the ice cream u should be abel to say this sweet for try it out u will like it
Thanks ope,I understand mutual funds better now.I have a question though, what’s the minimum amount investable in these mutual funds?
Hi Joy,
Thanks for your comment.
There’s no minimum amount, you can begin small and grow your investments from there.
I understand mutual fund better now
Thanks so much. I understand this better. Hope to invest soon.
Thanks. I now understand mutual fund now!
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Thank you for this..Now understand mutual funds
Hey. I’m Abdulrahman Malami and i really appreciate for the information and me gonna ask a single question, what’s the minimum amount of money for the investment? Thank you
I now understand mutual funds better now
This information has helped many clients in the investment. It is a type of investment that allows the client to invest in different types of assets. There is nothing to worry about the procedures, the fund managers will administer your money.
I understand mutual funds. Now I’m craving ice cream.
I do understand now what mutual funds but how do I start
Diversification and expert management is probably the best thing about mutual funds. Right now both passive and active funds are getting traction.
I understand it a bite but I still have some question? Mr Ope all the investment you analysed through the ice method all are still risk taking what is the difference is that some are high risk why others are low risk? I have your app the person that introduce me to it only told me the 3 months savings plan which I just gave it a try now. I saw others stocks so I needed more clarifications so that I know what to do. Thanks for your explanations pls I still need a customer service number for more guard.
Thanks Ope for this insight, I now have an understanding of what mutual fund is about though more information is still needed
When am I going to get my investment money back
Thank you very much. Very insightful and so fun to read.
I understand mutual funds now, thank you .
I understand