Private Equity vs. Venture Capital
While both venture capital and private equity firms provide cash in exchange for equity positions in companies, the main distinction is the juncture in which the investment is made. With the exception of turnaround investments, private equity firms tend to invest in more established businesses with a history of positive, and preferably reliable, cash flow whereas venture capital firms tend to invest in earlier-staged companies with a less proven market presence.
The distinction between the terms venture capital and private equity described above applies to the vernacular used in the United States. That is, in the United States, the two terms are used as if they are distinctly different types of firms investing in different stages of corporate growth. In Europe, however, the terms venture capital and private equity may be used somewhat interchangeably in that British English uses the term venture capital to describe a specific subset of the private equity market. Therefore, in Europe, when someone speaks about private equity, they may in fact be referring to what someone in the United States would call a venture capital firm.
Using the distinction drawn in the United States, the private equity data module available on www.PrivateEquityInfo.com specifically excludes venture capital firms unless a firm blurs the distinction by operating across the spectrum.