Private equity placements are the largest source of real risk capital in the country
Private equity placements refers to private capital investors that invest specifically in your company. They are invaluable to your venture and often work in groups to improve the efficiency of their due diligence. The most important considerations to the investor’s decision are the personal characteristics of the entrepreneur and the market-product potential of the business.
Private capital investment groups typically consist of 80-90 members and will expect around a 30-40% return on the investment they make in the business. Their timeline for repayment is generally more lenient and relaxed than a venture capitalist. This is why many owners choose private capital investors to fund their businesses.
Here are some interesting facts about private equity placements:
- Private equity placement groups funded 236% more companies in the year 2000 than were funded in 1996
- Of the companies screened and formally invited by private equity placement groups to present their business plans, one-third received funding
- Conservative estimates put the magnitude of private equity placement investors at approximately $20 billion per year
- On average, private equity placement groups tend to include 85 members who look for a 35% return on their investment
- Private equity placement fund thirty to forty times as many entrepreneurial companies as the entire venture capital industry
- Research shows that in the United States alone, one out of every twenty households has a net worth of at least $1 million