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VOL. 1, ISSUE 1 (2025)
Private equity vs. Venture capital: A comparative study of investment mechanisms and exit strategies
Authors
Dr. Shakti Singh
Abstract
Private equity (PE) and venture capital (VC) are
two pivotal forms of private investment that play distinct roles in financing
businesses. While both aim to generate returns through equity ownership, they
differ significantly in terms of target companies, investment mechanisms, risk
profiles, and exit strategies. This study conducts a comparative analysis of PE
and VC by examining their investment life cycles, financing structures,
governance approaches, and common exit routes. Using a qualitative comparative
methodology supported by case studies and industry data, the research
identifies that PE typically targets mature companies seeking operational
optimisation or strategic restructuring, whereas VC focuses on early-stage,
high-growth potential startups. Exit strategies in PE often involve trade
sales, secondary buyouts, or public offerings, while VC exits rely heavily on
IPOs and strategic acquisitions. The findings contribute to a deeper
understanding of the strategic, operational, and financial nuances of each
investment model, offering insights for investors, policymakers, and
entrepreneurs seeking optimal capital structures.
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Pages:10-12
How to cite this article:
Dr. Shakti Singh "Private equity vs. Venture capital: A comparative study of investment mechanisms and exit strategies". World Journal of Management, Vol 1, Issue 1, 2025, Pages 10-12
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