The private equity capital is divided into several segments with the following characteristics :
Seed capital – investors in seed capital, mostly individuals, provide capital, as well as their networks and experiences of entrepreneurial projects that are still in the stage of research and development. The objective of this phase, which is very risky in financial terms, is to finalize the development of technology as a prototype to validate the success of the technological challenge, and begin to test the existence of a market. The signing of a first client is a transition stage of venture capital.
Venture capital: the venture capital provide capital, as well as their networks and experience in the creation and early development of innovative high-growth companies. The term risk refers to the aspect of entrepreneurial venture, which makes the investment fundamentally different from purely financial trades. The few successful projects should more than offset capital losses of those that fail.
Capital – investments involved at the time of creation of the new company (start up).
Capital development: growth capital for companies that have passed the stage of venture capital, and thus validated the potential of their market and who need additional funding to support and accelerate their organic growth (funding their need for working capital) or their external growth (acquisitions).
Capital Transmission : also known under the term LBO (leveraged buyout) , the transactions involve acquiring the entire capital of a profitable company, usually operating in a mature market.
Capital reversal : capital investors usually acquire all (or a majority share) capital of a company in difficulty, and then inject the financial resources for the implementation of a recovery plan.