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Carried Interest Debate (Wiki Page) (view source)
Revision as of 14:45, 7 June 2016
, 14:45, 7 June 2016→What is a Private Investment Fund?
In reality, the lines between these types of funds can often be blurred, but the key distinctions can be summarized as follows:
*Private equity funds generally invest in large companies with the intent to restructure and sell the firms for a gain. These investments usually entail the acquisition of private companies, but they may also involve acquiring controlling interests in public companies through stock purchases. Private equity funds usually employ a long-term, hands-on approach to investment.
*Venture Capital funds aim to invest in small to medium-size startups with high-growth potential in exchange for a stake in the company. Once the fund purchases a stake in the company, it also provides coaching and other services to the company in order to increase its chances of success. Similar to private equity funds, venture capital funds invest with a hands-on, long-term strategy with the eventual goal of the investment being a liquidity event.
*Hedge funds, alternatively, focus on achieving high returns through risky, short-term investments that may come in the form of stocks, bonds, commodities, derivatives, and anything else that promises a quick gain. Accordingly, hedge funds tend not to adopt the same hands-on approach to investment that venture capital funds and private equity funds take.
