Codie Sanchez breaks down three types of private equity: venture capital funds early startups hunting for 100x returns, growth equity backs proven businesses with revenue, and buyout firms acquire mature cash-flowing companies to improve EBITDA. Founders often pitch to the wrong investors because they don't know the difference.
I invest millions.
A year in startups.
At our venture capital fund, we've seen.
One painful mistake.
Founders and business.
Owners make every day. They pitch the wrong people.
Private equity isn't one thing. It's three completely different universes.
Venture capital is the first VCs we bet on vision back.
Founders early who.
Will hopefully change the.
Way we live tomorrow. Think like Airbnb.
Uber, Google, Netflix. We expect 90% of the portfolio.
To not make it.
We're typically hunting for 100x outliers. Growth Equity investors don't invest in dreams. They bet on proof.
You need revenue, customers, margins, the working model.
Then we've got traditional private equity. They do what's called a buyout. These firms buy backs, not billions.
They take control, typically 51% or more equity in the companies. And they want mature.
Cash flowing companies.
Where they can cut.
Costs to improve.
Profit or EBITDA and scale.
A VC won't touch your profitable H vac business. A buyout firm won't touch your.
Pre revenue SaaS idea.
Growth Equity won't touch either.
Unless your model is already proven. But once you understand the differences, everything changes. Most people stay confused for years.
