Background and key terms

Private equity and venture capital essentially involve the investment of capital in a unquoted company, in return for an equity stake. The investment is usually made on a medium to long-term basis.

There can be some discrepancy with the terminology used in the sector. The term 'private equity' is often used to describe the industry as a whole and the term 'venture capital' can be used synonymously with 'private equity' to also cover all stages of investment. However, a distinction can be drawn with 'private equity' being used to refer to investment in more mature businesses and 'venture capital' being used to describe investment in business that are still in the early stages of development.