Funding is always a contentious issue for entrepreneurs who are on the verge of establishing their companies. They may resort to bootstrapping in the initial stages to get their businesses up and running. They have got to rely on external sources without accumulating too much debt. Unfortunately, these aspiring businessmen face a serious dilemma. They have 2 option open to them. These proprietors can approach a venture capitalist with a good reputation in the market. On the other hand, they can consult a reliable firm specializing in private equity. Industry experts say they need to know the difference between these potential fund managers.
Tyler Tysdal – Are venture capitalists and fund managers dealing in private equity the same?
America can boast of many financial experts. However, very few of them can match the popularity and achievements of Tyler Tysdal. This MBA graduate is currently the managing partner of a family-owned business know as Platte Management. He also the founder and brainchild behind the operations of TitleCard Capital. This is a prominent firm specializing in private equity. The organization has been instrumental in helping individuals and businesses increase their wealth. The companies which came to him for assistance now own assets worth almost $700 million. This is no small feat. Today, TitleCard Capital is among the top financial organization in the country. He is actually a native of New York but currently resides in Denver, Colorado.
Tyler Tysdal says entrepreneurs need to understand an important fact. Venture capitalists and fund managers specializing in private equity both invest their money in businesses. In doing so, these financiers claim a percentage of the profits and ownership of these companies. However, they aren’t the same. This prominent financial analyst points out the following 2 important difference between them:
- Investees
Venture capitalists tend to invest their money in potential start-up businesses and companies in emerging industries. The funds they accumulate for such organizations come from wealthy investors and prominent financial institutions. If the need arises, these financiers even approach investments banks. They prefer to create opportunities for concerns in developing ground-breaking technology. However, this isn’t the case with fund manager dealing with private equity. They invest in going-concerns who have to carry their operations for a number of years. However, these businesses have been under-performing in recent years.
- Diversification
Organizations specializing in venture capital don’t put all their eggs in one basket. These financiers prefer to diversify their investment. They find to invest their money in businesses operating in different sectors of the economy. This ensures the profits of another offset the losses from one concern. Moreover, they are a position to provide lucrative returns to all their investors.
On the other hand, a firm dealing with private equity invest their funds in select companies. Entrepreneurs need to remember private equity can be in the form of buyouts or exit considerations
Tyler Tysdal says venture capitalists and funding managers dealing in private equity can meet the needs of entrepreneurs. However, they need to keep in mind the above 2 important difference between these financiers. Only then can they make the right decision in the best interests of their businesses.
