Private Equity and Venture Capital in Europe

3.2. A Review of the Venture Capital (and Private Equity) Cycle

Empirical evidence clearly shows that private equity and venture capital deals cannot be considered “traditional” financial deals for two reasons: the different evaluation system and the above average risk profile. As Benveniste et al. underlined, this industry develops where a greater informative opacity exists, because of sectors considered (i.e., venture capitalists tend to specialize in high tech and high growth sectors), the agreement characteristics (i.e., private equity operators and venture capitalists usually define the exit strategy before the deal), and the traits of issued securities (i.e., warrant rather than preferred shares), apart from the expectations of the entrepreneurs ...