What is the difference between venture capital investing and leveraged buyout investing?
Venture investing is when an investment firm provides capital in exchange for equity in very early stage companies, such as internet or biotech companies that do not have a long operating history, if any, of generating revenues, but tremendous growth opportunities. While there are many investment firms around the country that specialize in early stage venture capital funding for start-up companies, MCM limits its investing activities to leveraged buyouts or recapitalizations in companies that are generating at least $15 million in annual revenues. The typical leveraged buyout investor will acquire a company with their own equity capital in conjunction with bank financing in more well-established firms that have a track record of generating revenues and cash flows that can support a prudent amount of debt that can be secured by assets in the transaction. Leveraged buyout investors typically seek returns of 25%-35% versus venture capital investors that are seeking returns in excess of 35
