Private equity: definition and beginner's guide
What private equity is, its different forms, how to access it and the risks to understand before investing.
Private equity means investing in companies that are not listed on a stock exchange. Long reserved for institutional investors, it is now open to individuals through several routes. It follows different rules from the stock market: a long horizon, low liquidity, high risk and the need to do your own analysis.
The main families
| Family | Companies financed | Risk profile |
|---|---|---|
| Venture capital | Young, innovative companies | Very high: many failures, a few big successes |
| Growth capital | Established companies that are accelerating | High, but on companies that already have revenue |
| Buyout capital (LBO) | Acquisition of mature companies, often with debt | Depends on the level of debt and the quality of the company |
| Turnaround capital | Companies in difficulty | Very high |
How an individual can access it
- Funds (in France, notably FCPR, FCPI and FIP funds): a manager selects the companies and diversifies the portfolio, in return for fees.
- Direct investment: on your own or within a business angel club, you choose the companies yourself.
- Online platforms: they present selected deals and let you subscribe with smaller tickets, sometimes from a few hundred euros.
What to understand before you subscribe
- Liquidity is low. You cannot sell an unlisted stake in a few clicks; a secondary market may exist, but resale depends on there being a buyer at the asking price.
- The horizon is long. It often takes several years before any exit.
- The risk of losing capital is real. A company can fail and the security can lose all its value.
- Diversification is essential. Spreading your allocation across several companies limits the impact of a single failure.
- Fees matter. Entry, management and performance fees reduce the final result: read them before you subscribe, not after.
Where to start
Define your allocation
What share of your wealth can you tie up for several years without needing it?
Choose how you will access it
Funds, direct investment or a platform, depending on the time and expertise you want to devote to it.
Start small and diversify
Several modest tickets rather than a single large one, especially for a first investment.
This guide is for information only and does not constitute investment advice. Investing in private companies carries a risk of total or partial loss of capital. Our due diligence checklist and our investor profile quiz can help you structure your first steps.