What do venture capital and private equity firms do? Some current and historical examples

ABSTRACT

The venture capital and private equity investment fields are not as well understood as other sectors of the financial industry, especially those focused on publicly traded instruments, such as stocks and bonds. To help business librarians understand venture capital and private equity firms, this article looks at how these businesses invest. By briefly examining investments by three venture capitalists and three private equity firms, readers can begin to understand the methods and aims of those investors. This article describes investments by venture capital leaders Georges Doriot of American Research and Development, William J. Casey, and Tom Perkins of Kleiner Perkins. It also describes some of the criteria applied by those venture capitalists to select firms in which to invest: how they evaluated companies and the executives who ran them. The article also looks at three private equity firms, Warburg Pincus, Tribeca Asset Management, and the Carlyle Group, companies those PE firms purchased, and factors that made those acquisitions profitable.

KEYWORDS:

• Investment criteria
• private equity
• venture capital