Venture Capital Vs Private Equity: Where the Rich Are Investing in 2025

24 October 2025

Many people wrongly confuse venture capital (VC) with private equity (PE) because both invest in private companies and seek returns greater than the public markets. However, they are actually different worlds.

Venture Capital firms are betting on potential. VC spots and invests in young, rapidly growing firms that are often at a pre-profit stage. They typically take minority stakes of 10–30% and provide directional guidance and connectivity, but the executions are up to the founders. The risk is extreme: 70–75% of all startups fail to return capital to investors, but when they succeed, the upside can be remarkable. 

For example, in 2025 alone, India saw 1,270 VC deals close, representing $13.7 billion invested, up 45% from 2024—with the largest segments of dollar invested going to consumer tech $5.4 billion, with Zepto, Meesho, and other quick commerce players taking centre stage. Once again, India offers events and case studies of how some early or modest bets led to significant returns, with Flipkart, Paytm, and Zomato establishing moderate VC investments into massive firms. 

Private Equity is targeting maturity. PE firms are usually buying a controlling stake of often >51% into well-established businesses that generate a thousand crores or more in revenue and/or have steady cash flow. Their playbook includes transforming these businesses to increase value while reducing risk for their investors, and might include things like streamlining operations, expanding markets, professionalizing the leadership teams, and financial restructuring, among others. The risks are much lower than VC, with 70–85% of all PE deals returning positive gains for the firms, but those gains are generally a multiple of 2–3x in 5–7 years. Similar to private equity firms, India is demonstrating an example with Kedaara Capital aggressively investing the massive amount of $1.73 billion across a toned-down 2024 pour-in, showing that all firms are stabilizing systematic improvements and instruments for growing to a start-up, not speculative bets.

To summarize under the bold: VC offers "high-risk, high-reward" fuel to innovative start-ups; PE produces disciplined, focused growth in a more developed, established company.

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