Tyler T. Tysdal has seen and done just about everything in the world of investment during his career, he has been a fund manager, he is an investor and he understands the world of businesses investment better than anyone I know. This makes him the perfect person to answer some of those burning questions which you have been sending in recently regarding the various types of business investment that are made. Whether you are looking to invest your money or you simply wish to learn more, here are some answers to those burning questions.
What is Venture Capital?
Venture capital is a vehicle which invests in young businesses who are launching in exciting growth industries. The investment is pretty simple, the VC will give money from a fund to a start-up, in exchange for a large equity stake in the business. The VC will then use its experience and its financial weight to impact opportunities and to help the business find success, with the end game being to sell the stake when it is more valuable.
What is Private Equity?
Private equity is also an investment fund except it looks at struggling businesses which are in need of financial support. The private equity fund will look to buy up a small stake in the company, as well as looking to place someone on the board of directors. The private equity fund will look to streamline the business and sell off areas of the company that aren’t working. Once the stock price of the business rises, the private equity group will sell their stake and then share out the profits amongst investors.
Where Should I Invest?
If you are looking to invest money in a fund then either of these could be a viable option, but private equity is certainly the safer bet. The only time that you should seriously look into venture capital investment is if you have experience in the business that you are investing into. Private equity will require a larger investment stake but once you have given your money to the fund, there is little that you really need to do.
What to Look For When Finding a Fund?
When looking for either a VC or private equity fund, make sure that they have a track record of success, make sure that you are entering into a well funded pool and also ensure that their goals match with yours in terms of the return that you can expect and the time frame for your return.
Using The Knowledge
Learning about investment can actually help you in your everyday lives, and there are many approaches which can be applied elsewhere in your life. For example this is all about weighing up risk and reward, calculating your choices and making tough decisions. The mentality that you will use as an investor can certainly be used in other areas of your life such as your work or even your family life.
Any more questions, feel free to fire away!