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What is Venture Capital and Private Equity?

                                                                              

Venture Capital and Private Equity are sources of funding for setting up and growing companies, and their main sources of capital are investment funds, such as Venture Capital/Private Equity Funds - FIPs - and Mutual Funds for Investment in Emerging Companies – FMIEEs - that in accordance with their prospectuses and investment guidelines, acquire quota shares in companies. The invested companies receive much more than just financial resources: they are able to count on a new partner.

 

In other words, venture capital is an alternative to long-term financing (bank loan), and the business risk is shared through a partnership between the investment fund managers (General Partners - GP) and the entrepreneurs. In addition to taking on the business risk and injecting capital, the partner contributes with its network of relations with other companies, suppliers and buyers, and also provides support to manage changes aimed at strengthening corporate governance and increasing the management efficiency of the growing business.

 

For this to be possible, an entire virtuous circle is required, and the venture capital industry has a vast range of players. On one side of the equation, GPs are responsible for Seed Capital, Venture Capital and Private Equity funds and invest money raised from third parties, the LPs (Limited Partners) which include Pension Funds, Family Offices, Fostering Agencies,  and Qualified Investors. On the other side, the entrepreneurs themselves have businesses at various stages of maturity and are looking for capital and experience to ensure the growth of their businesses.

 

Contributing to build investment ecosystems, these types of partnerships support businesses at all stages of development, from Seed Capital (aimed at business structuring), passing through the Venture Capital stage (to support the expansion of businesses that already have significant gains), and going as far as Private Equity, which  funds businesses that are already well-developed, on the lookout for an IPO, merger opportunities or a strategic sellout to a big company.

There are also the so-called “angels”, investors who decide to invest on an idea or product prototype to back a startup. Groups of businessmen, known as accelerators, also get together to offer services and mentoring to these enterprises.

Because we believe in the importance of this industry and its contribution to boosting the competitiveness of Brazilian companies, the Investments Unit of Apex-Brasil supports the development of many initiatives, either connecting global investors to local fund managers or supporting startups and other businesses of all sizes on the lookout for capital and partners.