Our view in this regard is very simple:
As venture capital and private equity continue to make news headlines, entrepreneurs may find it challenging to distinguish fact from fiction.
1. Do investors win at the expense of entrepreneurs?
2. Are investors out to wrest control from management?
3. Is an investor’s sole focus on the final liquidity event?
Without question, misperceptions can prevent an entrepreneur from making rational, fact-based decisions.
During my 20 years as an investor, I have come to identify what I call “The Five Myths of Private Equity.” Let’s closely examine these five myths, one by one:
Myth #1: Private equity is a win-lose game — investors win, entrepreneurs lose.
According to this myth, private investors somehow make off with the value of your company — perhaps buying at a too-low price and cutting you out of the eventual rewards that you’d earn from going public or selling to another company. Remember, though, that private equity investors only make money if the value of your company appreciates.
Continue Reading: Private Equity Investing