Fund stage focus
Early-stage fund: A venture capital fund investing in companies in their first development stage.
Later-stage fund: A venture capital fund investing in later-stage companies in need of finance to grow.
Balanced fund: A venture capital fund focused on both early-stage and later-stage companies.
Growth fund: Funds which invest in relatively mature companies that are looking to expand or restructure operations.
Buyout fund: A fund which acquires controlling stakes in established companies.
Mezzanine fund: A fund that provides (generally subordinated) debt to facilitate the financing of buyouts, frequently alongside a right to some of the equity upside.
Generalist fund: A fund with either a stated focus of investing in all stages of venture capital and private equity investment or with a broad area of investment activity.
Seed: Financing provided to research, assess and develop an initial concept before a business has reached the start-up phase.
Start-up: Financing for product development and initial marketing. Companies have not sold their product commercially and are in the process of being set up.
Later-stage venture: Financing for the expansion of an operating company. Later-stage venture tends to finance companies already backed by venture capital firms.
Growth: A type of private equity investment – most often a minority investment – in relatively mature companies that are looking for capital to expand into new markets or restructure operations.
Buyout: Financing to acquire a company. It may use a significant amount of borrowed money to meet the cost of acquisition.
Rescue/Turnaround: Financing made available to an existing business in difficulty, with a view to re-establishing prosperity.
Replacement capital: The purchase of a minority stake of existing shares in a company from another private equity firm or from another shareholder or shareholders.
Type of investors
Corporate investor: Corporations that deliver non-financial products and services.
Endowment: An institution that is given capital (and possibly other assets) via a donation with the stipulation to invest it and use the gains for specific objectives.
Family office: An office that provides investment management and other financial services to one or several families.
Foundations: A non-profit organisation through which private wealth is contributed and distributed for public or charitable purposes.
Fund of funds: A private equity fund that primarily takes equity positions in other funds.
Government agencies: Country, regional, governmental and European agencies or institutions for innovation and development (including structures such as the EBRD or EIF).
Other asset manager: Financial institutions (other than bank, endowment, family office, foundation, insurance company or pension fund) managing a pool of capital by investing it across asset classes to generate financial returns.
Pension funds: A pension fund that is regulated under private or public sector law.
Sovereign wealth funds: State-owned investment fund managing a pool of money derived from a country's reserves.
Independent and captive funds
Captive funds: Funds that are 100% owned by the parent organisation.
Independent funds: Semi-captive funds (those in which the parent owns less than 100%) as well as wholly independent funds.
Initial public offering (IPO): The sale or distribution of a company’s shares to the public for the first time by listing the company on the stock exchange.
Repayment of principal loans: If a private equity firm provided loans or purchased preference shares in the company at the time of the investment, then their repayment according to the amortisation schedule represents a decrease of the financial claim of the firm into the company, and hence a divestment.
Repayment of silent partnership: A silent partnership is a type of mezzanine financing instrument. It is similar to a long-term bank loan but, in contrast to a loan, a silent partnership is subject to a subordination clause, so that in the event of insolvency all other creditors are paid before the silent partner. The company has to repay the partnership and has to pay interest and possibly a profit-related compensation. The subordination clause gives the capital the status of equity despite its loan character. This financing instrument is frequently used in Germany.
Sale of quoted equity: The sale of quoted shares only if connected to a former private equity investment, e.g. sale of quoted shares after a lock-up period.
Sale to another private equity firm: The sale of company shares to another direct private equity firm.
Sale to financial institution: The sale of company shares to banks, insurance companies, pension funds, endowments, foundations and other asset managers other than private equity firms.
Trade sale: The sale of company shares to industrial investors.
Write-off: The total or partial write-down of a portfolio company’s value to zero or a symbolic amount (sale for a nominal amount) with the consequent exit from the company or reduction of the shares owned. The value of the investment is eliminated and the return to investors is a full or partial loss.