The term “venture capital” is typically associated with high-risk, high-growth potential start-ups that may sink or soar depending on a number of external factors. Any investment in a start-up, however, can be called a venture capital investment, though a common hallmark of venture capital investors is that with their investment they obtain some level of influence over the company in which they invest.
Without experience or a significant amount of time spent studying how various investment vehicles work, chances are you, the average accredited investor, will need to locate a financial advisor who can help direct and manage your investment.
A hedge fund can invest in almost any opportunity, in any market, where it foresees potential profits at low risk. While hedge fund strategies vary enormously, most hedge against market downturns and, indeed, the primary purpose of most hedge funds is to reduce volatility and risk while attempting to preserve capital and deliver positive returns under all market conditions.
Private Equity is, in the most simplistic terms, equity held in a private business. PE firms are run by general partners (also referred to as called sponsors), who invest money raised from investors who work together for a limited amount of time and thus are called “limited partners”.