VC 101: What’s the Difference Between Private Equity and Venture Capital?
Master the key distinctions between these two key asset classes
AV Co-Founder Luke Antal’s VC 101 video series provides insights on venture capital essentials. In this episode, the AV Chief Community Officer considers the difference between two key alternative asset classes: venture capital and private equity.
Venture Capital vs. Private Equity
While the terms are often used interchangeably, they are not the same thing.
Private equity (PE) normally invests in mature companies that are distressed or restructuring, but still have favorable growth prospects. A PE investor usually takes a majority stake in a company, attempts to improve it, and then quickly sells.
In contrast, venture capital (VC) typically invests a minority stake in startup companies with high growth potential. Interested in long-term growth, they are committed to standing by the company until earning a substantial payout. Another difference, Luke notes: the size of venture businesses is highly variable. “[VC] companies can range from being very small — think a founder in her garage — all the way up to large, pre-IPO growth companies.”
Watch the video below to learn more about distinctions between PE and VC.
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Luke AntalCo-Founder & Chief Community Officer, Alumni Ventures
Luke Antal is a Co-Founder of Alumni Ventures and is an experienced startup and tech executive with a focus on marketing, sales operations, and customer experience. As the firm’s Chief Community Officer, Luke has built and oversees many of the processes, systems, and teams that contribute to the firm’s fundraising initiatives. He has scaled many startups as a founder or employee #1. He is the Founder of the AV Venture Fellow Program, which is a one-of-a-kind career accelerator and educational experience that is a groundbreaking on-ramp to a career in VC. Luke has an AB in Environmental Studies from Dartmouth College.
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