A Snapshot of Private Equity Funding

Private equity funding is a form of financing that appeals to high net worth individuals. In this, investors provide direct funding to companies for a fixed time period for a high rate of return. The investors often hold an important position in the business and provide tactical expertise as well as support. The money that they invest can be used for varied reasons, ranging from funding a new idea or expanding the working capital to strengthening the balance sheet or making an acquisition. Private equity funding is not a short-term investment like a hedge fund but a long-term funding option with investors providing substantial capital for an extended period. After the stipulated time, investors exit the company for profit. The exit plan includes different options, including initial public offering in a stock market or sells to another private equity funding investor.

Types of Private Equity Funding

Though there are different types of private equity funding, it’s primarily categorized into Venture Capital (VC) and Leverage Buyout (LBO). Venture capital refers to private equity funding in emerging businesses that are still in initial stages of formation but have high growth potential and can generate extraordinary returns. In comparison to VC, LBO provides funds to mature businesses with a focus on enhancing the rate of return. Private equity funding through LBO channel is significantly larger vis-à-vis VC. Besides these two popular options, other types of private equity funding are Growth Capital, Fund of Funds (FoF), Real Estate and Turnaround/Distress Fund Capital.

Strategic Solutions by Resurgent India

Private equity funding has gained momentum in the past decade and is only expected to continue in the future. This vital funding option has contributed to the growth of many SMEs and entrepreneurs with strategic capabilities. For maximum benefit, one needs to have an in-depth knowledge of the entire private equity funding process. Resurgent India is a name one can trust as it has the experience and knowledge to execute private equity funding process quickly and efficiently.

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