Growth capital

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Unquoted companies require investment at every stage of development, from inception through to when the company is fully established and profitable. Companies will often seek investment from the private equity and venture capital industry, where investors provide finance in return for an equity stake in potentially high-growth companies.

There can be some discrepancy with the terminology used in the sector. The term 'private equity' is often used to describe the industry as a whole and the term 'venture capital' can be used synonymously with 'private equity' to also cover all stages of investment. However, a distinction can be drawn with 'private equity' being used to refer to investment in more mature businesses and 'venture capital' being used to describe investment in business that are still in the early stages of development.

Types of investment

Private equity and venture capital finance can broadly take the form of:

  1. •

    seed capital, which is capital provided to completely new businesses—finance is usually provided by friends and family of the entrepreneur setting up the business and by business angels (usually unconnected wealthy individuals)

  2. •

    venture capital, which is capital provided after seed

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