| Venture capital (VC) | Equity financing provided to early-stage and growth-stage companies in exchange for an ownership stake; high risk with potential for outsized returns |
| Angel investing | Individual investors who provide early-stage funding (pre-seed/seed) to startups, often in exchange for convertible debt or equity |
| Seed stage | The earliest formal VC funding round; capital used for product development, market research, and building the initial team |
| Growth capital (growth equity) | Minority or majority equity investment in mature, profitable companies seeking capital for expansion, new products, or acquisitions |
| PIPE (Private Investment in Public Equity) | A private placement of shares in a publicly traded company, typically at a discount to the market price; provides growth capital without a public offering |
| Leveraged buyout (LBO) | Acquisition of a company using a significant proportion of debt (typically 60—90%); targets stable cash flow businesses |
| Management buyout (MBO) | An LBO in which the existing management team acquires the company, often with PE backing |
| Management buy-in (MBI) | An LBO in which an external management team acquires the company and replaces existing management |
| Mezzanine financing | Subordinated debt that sits between senior debt and equity in the capital structure; often includes equity warrants or conversion features; higher yield than senior debt |
| Trade sale | Exit strategy where the portfolio company is sold to a strategic buyer (another operating company in the same or related industry) |
| SPAC (Special Purpose Acquisition Company) | A shell company that raises capital through an IPO with the sole purpose of acquiring a private company, effectively taking it public |
| Direct listing | A method of going public where existing shares are listed on an exchange without underwriting or new share issuance; no new capital raised |
| Secondary sale | Exit strategy where the PE fund sells its stake to another PE firm or financial buyer rather than to a strategic acquirer |
| Recapitalization | A restructuring of a company’s capital structure, often involving the company taking on new debt to pay a special dividend to the PE owners |
| Private debt | Non-bank lending to private companies, encompassing direct lending, mezzanine, venture debt, and distressed debt strategies |
| Distressed debt | Investing in the debt of companies that are in financial distress, bankruptcy, or restructuring, typically purchased at a significant discount to face value |