Hello,
I have been investing in various segments for quite a few years now. I feel that the private markets are a great way to earn profits faster and in a far less volatile market. Many investors have been investing their capital in private equities which are an alternative investment class beside your stock market investment portfolio.
There are various strategies that investors follow while investing in a private equity. These strategies depend upon the investor’s goals and expectations. Every strategy is different from each other and needs different skills to be successful. These strategies are:
- Venture capital
Venture capital is a type of private equity strategy wherein capitalists make an investment in the early stages of the company. These venture capitalists give the company a certain amount of funding to help them during the starting stages of the company to help them in exchange for the company’s shares. These capitalists do not ask for a majority amount of share, which is generally below 50%, and is acceptable by the founders of the company.
- Growth equity
The second type of private equity strategy is growth equity. In this strategy, the capital investment is made in an established company that is growing constantly. The company asks for funds from capitalists as they need extra funds to grow. Similar to venture capitals, growth equity investments are made in return for a minor share of the company.
- Buyouts
Buyouts are a type of private equity strategy that occurs when a mature company turns private and is purchased by a private equity firm or at times by the existing management team itself. As these funds are huge, these investments make up for a large portion of funds available in the private equity market.
I hope my response helps you understand the different strategies adopted by investors while investing in private equities!
Source :- What are the private equity investment strategies?
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