To raise private equity, your company can seek out large investments from private investors. Usually this is done early on in a company’s history, perhaps even before it has been started up. This is usually a better option to seek after than venture capital.
With venture capital, a company can usually expect to make a number of sacrifices. Venture capital usually takes a good deal of time to obtain, sometimes months or longer. Venture capitalists will expect to have a large rate of return on the money they invest in your company. Further, in order to achieve that rate of return you can also expect that venture capitalists will attempt to micromanage and otherwise control many aspects of your company, from day-to-day operations to long-term goals and strategies. And in addition to these negative points, venture capital firms only invest into about 1,000 companies yearly, with total investments reaching around $5-7 billion.
In comparison, you can seek to raise private equity through private placements (investments) through various individuals who are usually wealthy and educated. It’s more likely that you will find someone who actually understands you, your company, and your product in this way, rather than the venture capitalists who are usually more difficult to deal with. These investors only expect about a 35% return on invested capital, and their control and interference of your business usually won’t be so great. These individuals usually invest about $200,000 into the companies they work with, in addition to providing their skills, knowledge and connections. They are usually the better choice to raise private equity—as a group the invest $20 billion or more each year into almost 50,000 businesses across the United States.
Posted in 
Tags: 