Private Equity (PE)

Any company that is not quoted on a stock exchange belongs to PE. However, while VCs focus on startup companies, traditional PE companies only start to care about startups once they reach substantial revenues (USD 10m or so at the very least) and start to become profitable – or at least have a profitable core business.

Pros

PE companies can enable massive financing rounds – often even enlarged with debt. This can create big growth opportunities, including options to acquire other companies.

Cons

Private equity companies typically want to see fast growth and a clear path to exit – which can be a trade sale or an IPO. Even more so than VCs they will take tough action if execution is not happening according to plan.

Recommendation

Only consider talking to PE companies if you have more than USD 10m of revenues and a profitable core business. It is possible to apply some creativity regarding “profitable core business” – investment bankers will know how to position your company in a way that it becomes investable for PE companies.