Growth capital

Growth capital

Unquoted companies commonly require investment at every stage of development, from their inception right through to when the business is fully established and profitable. Companies will often seek investment from the private equity and venture capital industry, which is where external investors provide finance in return for an equity stake in potentially high-growth companies.

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

Types of private equity and venture capital investment

Private equity and venture capital finance can broadly take the form of:

•
seed capital, which is capital provided to completely new businesses—finance is usually provided by friends and family of the entrepreneur setting

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