Business World

Capital investments deal exclusively with the acquisition of private equity. Private equity refers to companies that are not publicly traded in the markets. Capital investment is often confused with venture capital, however this one deals more with providing funding to start-up businesses.

Its operations are done by purchasing shares from existing shareholders, and by providing new funds to the company, in the form of subscription of shares newly issued by it.

Venture capitalists do not seek to keep their private equity forever. Depending on the industry, venture capitalists would stay a minimum of 3 years and a maximum of 10 in an industry. They leave the society by selling their shares.

Private equity is the opposite of public equity, meaning shares that are not traded publicly in the stock markets. These kinds of shares or bonds are not easy to sell because they do not give a lot of cash flow. Capital investment uses private equity due to its long term profitability.

Capital investment using private equity has three branches each one with different characteristics and focus of action:

Venture capital: the venture capital investors provide capital, as well as their networks and experience in the creation (known as seed capital) and the early stages of development of innovative technologies or considered high development potential and return on investment. The few successful projects that have more than offset the capital losses of those, more numerous, who fail.

Development capital is a form of funding that is given to companies that are already in their second stage of development, after having suffered the crisis of the first years. Contrary to venture capital, this kind of capital investment is given to companies that have been in operations for a few years.

Capital transmission is a way of giving funding to a business by acquiring all the capital of a company. This company is in a mature stage of development and have a promising future. It is also called leveraged buy-out and it is a sort of structured debt.

Capital returns are given to companies in order to finance their operation. A company will buy all the shares with a recovery plan in mind that will be executed

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