What is a private venture capital fund?
It is a private legal structure created specifically to invest in the share capital of companies not listed on the stock exchange.
We use the general term “private equity” fund.
Therefore, these structures do not exercise a productive activity as such, but only make a profit through the companies in which they invest.
Their investment portfolios comprise projects with very high risks and which can sometimes lead to a pure and simple loss. As a result, the profitability expected of this type of investment is also high.
There are many funds of this type worldwide aimed or not at specific sectors or segments. Some of them may reach a considerable size and control very large groups.
These funds often hold over 50% of shares in the companies in their portfolio in order to be able to make the strategic decisions required.
Based on a classic modus operandi, a fund holding the majority of shares in a company will optimise the latter’s structure and operation by taking all the measures it deems necessary to maximise its potential profit. At an opportune moment, all or some of the company’s shares or assets will be sold. Listing on the stock exchange is a classic sales channel.
There are also public venture capital funds. These funds have different and/or complementary objectives to those of private funds; however, the profitability aspect remains important.
Private Equity & Venture Capital
The investment made can be used for the different stages in a company’s development. By convention, we often talk about "Venture Capital” for investments made in companies whose activity is in the launch phase (and thus higher risk) and "Private Equity" for investments made in companies with a more mature activity.
In reality, Venture Capital is a specific category of Private Equity.
Several of these types of companies are active on the Belgian market. The majority of them are part of the BVA, the “Belgian Venturing Association”, which is to say the association of private equity & venture capital stakeholders active in Belgium.
Its website lists its members and some useful information.