When it comes to raising capital, not all investorsโor their moneyโare created equal. If youโve ever wondered how venture capital (VC) and private equity (PE) differ, youโre not alone. Both play vital roles in a startupโs funding journey, but they operate at very different stages of growth, with distinct goals and strategies.
Letโs break it down by the stages of investment to make this crystal clear.๐
The 5 Key Phases of Startup Fundraising
Every company that scales from scrappy startup to powerhouse enterprise follows a fundraising arc. Hereโs how VC and PE fit into the story:
1. Angel (Pre-VC)
๐ก This is where it all begins: a bold idea, a passionate founder, and a whole lot of risk.
- Focus: Backing high-potential ideas before thereโs a product, revenue, or even customers.
- Investors bet on vision, not validation.
- Typical Check Size: $10,000 โ $250,000
- Examples: Y Combinator, SV Angel, Initialized
Who invests? Angels, accelerators, and early believers willing to take a chance on an unproven concept.
2. Seed (Venture Capital)
Once thereโs some early tractionโmaybe a prototype, a few users, or a killer founding teamโitโs time for seed funding.
- Focus: Build the product, expand the team, and gain early traction.
- VCs are looking for potential product-market fit.
- Typical Check Size: $250,000 โ $2 million
- Examples: Seedcamp, Redpoint, Greylock
Why it matters: This stage bridges vision with execution, giving startups the resources to prove theyโre onto
something big.
3. Growth (VC/PE Blend)
By now, the company isnโt just an ideaโitโs a validated business model.
- Focus: Scale operations, expand markets, hire aggressively.
- Investors want fuel for rapid growth.
- Typical Check Size: $10 million โ $50 million
- Examples: Accel, Bain Capital Ventures, PSG
Crossover zone: At this stage, youโll see both venture capital and some private equity firms participating.
4. Growth (VC/PE Blend)
By now, the company isnโt just an ideaโitโs a validated business model.
- Focus: Scale operations, expand markets, hire aggressively.
- Investors want fuel for rapid growth.
- Typical Check Size: $10 million โ $50 million
- Examples: Accel, Bain Capital Ventures, PSG
Crossover zone: At this stage, youโll see both venture capital and some private equity firms participating.
5. Late Stage / Buyout (Private Equity)
This is where the big players step in.
- Focus: Streamlining operations, maximizing efficiency, positioning for IPO or acquisition.
- Private equity takes majority control, often buying out founders or early investors.
- Typical Check Size: $100 million โ billions
- Examples: Silver Lake, Thoma Bravo, Carlyle Group
Exit strategies dominate: PE firms aim for a profitable exitโwhether through IPO, merger, or acquisition.
The Quick Take
If youโre still wondering how venture capital and private equity stack up, hereโs your cheat sheet:
How Virtual Data Rooms Like ShareVault Fit Into the Picture
Whether youโre raising a Series A or preparing for a private equity buyout, thereโs one tool that becomes mission-critical: the virtual data room (VDR).
Hereโs why:
- Every phase is critical. You have to always be prepared.
- Investors need secure access to sensitive documents.
- Founders need to control who sees whatโand when.
- Both sides need an organized, audit-ready workspace.
A virtual data room like ShareVault provides a secure, centralized platform to share critical financials, IP, contracts, and due diligence documents with investorsโwithout risking data leaks or compliance violations.
For venture capital rounds, VDRs help streamline early diligence by providing controlled access to your startupโs cap table, product roadmap, and customer contracts.
For private equity deals, VDRs play an even bigger role:
- Handling large-scale due diligence across multiple bidders.
- Supporting buyouts, mergers, and acquisitions with clean documentation trails.
- Reducing friction in complex transactions where compliance and security are non-negotiable.
In a world where deals are moving fasterโand stakes are higherโtools like ShareVault donโt just make collaboration easier; they make it safer, smarter, and more professional.
Ready to Raise Smarter?
No matter where you are on your fundraising journey, understanding the difference between VC and PEโand leveraging the right tools like ShareVaultโcan help you move faster, minimize risk, and put your best foot forward.
๐ Want to learn more about how ShareVault empowers startups and scaleups? Get a demo today and see how we help companies close deals with confidence.
