Fund stage focus
Buyout fund: Funds acquiring companies by purchasing majority or controlling stakes, financing the transaction through a mix of equity and debt.
Early-stage fund: Venture capital funds focused on investing in companies in the early stages of their lives.
Generalist fund: Funds investing in all stages of private equity.
Growth fund: Funds that make private equity investments (often minority investments) in relatively mature companies that are looking for primary capital to expand and improve operations or enter new markets to accelerate the growth of the business.
Later-stage fund: Venture capital funds providing capital for an operating company which may or may not be profitable. Typically in C or D rounds.
Mezzanine fund: Funds using a hybrid of debt and equity financing, comprising of equity-based options (such as warrants) and lower-priority (subordinated) debt.
Venture fund: Venture capital funds focused on both early and later stage investments.
Types of investors
Corporate investor: Corporations manufacturing products or delivering non-financial services.
Endowment: An investment fund established by a foundation, university or cultural institution providing capital donations for specific needs or to further a company’s operating process. They are generally structured so that the principal amount invested remains intact (for perpetuity, for a defined period of time or until sufficient assets have been accumulated to achieve a designated purpose).
Family office: An entity that provides services to one or more affluent families, including investment management and other services (accounting, tax, financial and legal advice etc.).
Foundations: A non-profit organisation through which private wealth is distributed for the public good. It can either donate funds and support other organisations, or provide the sole source of funding for their own charitable activities.
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.
Other asset manager: A financial institution (other than a bank, endowment, family office, foundation, insurance company or pension fund) managing a pool of capital by investing it across different asset classes with the purpose of generating financial returns. It may include private equity direct funds that occasionally do indirect investments, but excludes fund of funds that are a standalone option.
Pension funds: A pension fund that is regulated under private or public sector law.
Sovereign wealth funds: State-owned investment funds investing in foreign direct private equity funds to diversify their portfolio.
Seed: Funding provided before the investee company has started mass production/distribution with the aim to complete research, product definition or product design, also including market tests and creating prototypes. This funding will not be used to start mass production/distribution.
Start-up: Funding provided to companies, once the product or service is fully developed, to start mass production/distribution and to cover initial marketing. Companies may be in the process of being set up or may have been in business for a shorter time, but have not sold their product commercially yet. The destination of the capital would be mostly to cover capital expenditures and initial working capital.
Later-stage financing: Financing provided for an operating company, which may or may not be profitable. Late stage venture tends to be financing into companies already backed by VCs. Typically in C or D rounds.
Growth: A type of private equity investment (often a minority investment) in relatively mature companies that are looking for primary capital to expand and improve operations or enter new markets to accelerate the growth of the business.
Buyout: Financing provided to acquire a company. It may use a significant amount of borrowed capital to meet the cost of acquisition. Typically by purchasing majority or controlling stakes.
Rescue / Turnaround: Financing made available to an existing business, which has experienced financial distress, with a view to re-establishing prosperity.
Replacement capital: Minority stake purchase from another private equity investment organisation or from another shareholder or shareholders.
First Divestment following Flotation (IPO): The sale or distribution of a private company’s shares to the public for the first time by listing the company on the stock exchange.
Management/ Owner buy-back: The buyer of the company is its management team.
Repayment of preference shares/ loans or mezzanine: If the private equity firm provided loans or bought preference shares in the company at the time of 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.
Sale of quoted equity post flotation: It includes 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 buyer of the portfolio company is a private equity firm.
Sale to financial institution: A financial institution is an entity that provides financial services for its clients:
- Depositary Institutions: deposit-taking institutions that accept and manage deposits and make loans, including banks, building societies, credit unions, trust companies, and mortgage loan companies
- Contractual Institutions: Insurance companies and pension funds
- Investment Institutes other than direct private equity firms.
Trade sale: The sale of a company's shares to industrial investors.
Write-off: The value of the investment is eliminated and the return to investors is zero or negative.