What exactly is a venture capital fund and how is it different from a private equity fund? Incubators? Seed Groups? Family Offices? Hedge Funds? Don't over think it - if it feels like there is a lot of overlap, that's because there is. With that in mind, we break through some of the jargon below.
Venture Capital funds specialise in investing in early-stage or emerging companies (startups). They do not typically invest at the very earliest stages, usually wanting to see a significantly progressed product - not just an idea.
An accelerator or incubator usually invests a small amount of money into very early-stage (often concept) startups. They often take the form of formal programs that help provide startups tools and services to get to a viable product.
A Seed or Angel Group is a dedicated early-stage investor that will invest at the idea or first product stage. These often consist of a network of individual angel investors, as opposed to a formal fund.
A Corporate means a company with an active investment arm. Unlike an external fund, the money comes from the corporation itself, not third party individuals.
A Family Office or Individual refers to a high net-worth family or person. They are typically very flexible as they do not have to be accountable to third party investors.
Private or Growth Equity refers to a group of funds that typically invest in fast-growing or mature companies, and may seek majority ownership or control. These funds will invest in both public (listed) and private (unlisted) companies.
Listed Equity/Debt funds will only invested in listed companies. There are a wide variety of funds with differing mandates.
Pensions and Sovereigns refers to government or quasi-government funds, including worker superannuation. Many of these do not invest directly, or if they do, only into very large, mature opportunities.
Alternatives and Hedge Funds refers to an umbrellla of funds that can invest in a wide variety of companies, structures, and asset classes, both listed and unlisted.