Private Equity Importance

Private equity is essential to building robust private sectors that create employment, improve living

standards, catch up with the trends and produce tax revenues. The importance of equity investors

are ever increasing. Contrary to the popular myth that private equity firms weaken companies by

stripping them off their assets and saddle them with debt, private equity firms build companies; they

do not tear them down. In the last 30 years, private equity has been adding asset and value to their

respective portfolio companies. A 2008 study by the Boston Consulting Group found that since the

1980’s, operational improvement as a source of value increased two-fold to more than one-third of

value creation. Companies still haven’t realized the fact that private-equity is a long-term investment

that takes years before the full benefits are realized. This long term focus aligns the interests of the

private equity firm with the company it buys and ensures that the company has a lasting success.

Starting and building a prosperous business is an ambition of many entrepreneurial minds and has for

a long time been the main source of job creation. Although talent and ambition with a tinge of quality

is seldom found, it’s found nevertheless. This is where a lot of private equities fail to capitalize on the

entrepreneurial potential in their respective markets, they neither have the time nor the resources to

waste on an idea. There is a quite a gap in the investors circle vs. the emerging SMES. The skepticism lies

in both ends, the fact remains that SME’s are hesitant to ask for investment because of their approach

towards investment, the idea that they are indebted to their investors. We are not discounting the fact...

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... years. Innovation is key to building and bridging the gap between venture capitalists/angel investors and

potentially the next big startup. Innovation is expensive by default, however the returns are better off

than your average blue chip. A $30,000 seed investment requires much more than your $30,000, it

requires a precise mix of intellectual and technical resources. Seed is the first stage of venture capital

financing. They are often comparatively modest, in-order to help the founders get on their feet, build

their management team, develop their product, build a business plan and the likes. An environment that

is regulated in the right manner will allow investors to be less skeptical and focus more on development

of these ideas rather than their focus on the return on investment, which is the ideal scenario for the

development of a robust economy.