What is private equity?

It is useful to think of the market in two distinct parts. The first is start-up venture capital. The second is the market for leveraged buy-outs of existing businesses. The market is commonly divided further, with venture capital differentiated between seed capital and early-stage venture capital, while the later stages of investing differentiate between buy-outs and expansion capital. Another important area for private equity funds is the funding or co-financing of public-sector projects. In the United States these undertakings are known as PIPE (private investment into a public entity) investments; in the UK similar ventures fall under the generic titles of private finance initiative (PFI) and public private partnership.