I had my own doubts. Venture capital and private equity are very different disciplines. While both purchase stocks in privately held businesses, I wasn’t sure how to quite feel about PE being so risk averse. It was incredibly rare to find a VC portfolio driven by disruption opportunities. I looked closely into the increasing private equity buyouts of startups, and I’m learning there are key areas VCs could learn from PE’s economics.
I had a feeling that most VCs don’t provide as much value as they claim. Even in my own case, I wasn’t sure exactly what value I could add when I’m not in the deep-end with them in the business, team, market, and the opportunity. Private equity owns the business to steer through a rapid performance transition and selling them. With a clear line of responsibilities and a full team, it makes the investment with the goal of liquidation without the fund being dysfunctional. PE also has the advantage of drawing deep insight in different stages of growth whereas a VC may lose interest. I think once more public companies and investors embrace buy-to-sell strategy, they would benefit in refueling under-managed businesses and create a more efficient market.