Growth equity.

In plain English

Growth equity funds buy minority positions in businesses that are past the startup stage, already selling something at scale, and looking for capital to hire, expand, or acquire. Unlike a buyout, the fund usually does not take control and rarely loads the company with debt. Unlike early venture capital, the company already has customers and revenue, so the question is how fast it can grow rather than whether the product works. Money often goes into the company itself as new shares, though some deals let existing founders sell part of their stake. Returns depend mostly on the business growing, not on financial restructuring.

01Why it matters

For a founder, taking growth equity means new shareholders with board influence and an expected exit date, which changes how the company gets run even without a change of control.

02The math, step by step

Say a company with $20,000,000 of revenue sells a 25 percent stake for $30,000,000, valuing the whole business at $120,000,000. Four years later revenue triples and the company sells for $400,000,000. The 25 percent stake is worth $100,000,000, roughly 3.3 times the $30,000,000 invested.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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