The 4 Fundamental Differences between VC and PE
Read time: 3 min
I’ll be honest, most VC fund managers still confuse Venture Capital (VC) with Private Equity (PE).
They are just two different worlds.
![Spot The Difference : Can You Find Them All? [ Find The Difference #181 ] - YouTube](https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fe23e84ae-5032-440e-8a97-7e72136d4ad4_1280x720.jpeg "Spot The Difference : Can You Find Them All? [ Find The Difference #181 ] - YouTube")
1. Different Skillsets
VCs?
They’re like psychologists.
VCs aren’t just crunching numbers. They’re getting into people’s heads, reading between the lines, betting on founders’ visions.
It’s all about ambition and projection.
VCs are like, “What could this be in 10 years?” They dream big.
They take risks on those wild ideas and crazy founders.
PE guys?
Data, numbers, and endless spreadsheets back every decision.
They’re calculating every move to minimize risk.
No room for gut feelings or hunches here. It’s a numbers game.
2. Different Cultures
VC culture is all about maximizing opportunities.
Think startups. Think disruption. They want to ride that rocket ship straight to the moon, embracing the chaos and unpredictability.
High risk, high reward baby.
PE?
Totally different vibe.
It’s about downside risk protection. Conservative moves. Protecting investments.
They want predictable returns and stable growth.
They avoid chaos like the plague.
3. Analytical vs Judgment
When it comes to making decisions, VCs and PE firms are on opposite ends.
VCs lean heavily on judgment. Vision. Potential. They look at what the future could be.
They see what isn’t there yet.
PE firms?
Analytical to the core. Facts. Evidence. They base their decisions on solid, historical data. No guesswork. Just hard proof.
4. Procedural vs Entrepreneurial
PE is procedural. There are set sequences, analyses, and models they follow religiously.
Step by step. No deviation.
VCs?
Entrepreneurial. They leave room for change. For disruption. For breaking the rules.
They thrive on being contrarian.
VCs look at a model and think, “How can we flip this on its head?” PE sees a model and thinks, “How can we perfect this?”
Conclusion
VC vs PE is a battle of:
Psychology vs Numbers
Opportunity vs Protection
Judgment vs Analysis
Entrepreneurial vs Procedural
Different worlds. Different games.
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Pick your battles 😉
Another way someone put it to me once that I think fits in a lot of cases: VC = Find&Create Value, PE = Grow&Harvest Value.
Great take on VC vs. PE, Yoann!
Haven’t VCs started to behave like PEs lately ?