Private Equity and Venture Capital in Europe

1.2. Main Differences Between Corporate Finance and Entrepreneurial Finance

What is the difference between corporate finance and private equity finance (or entrepreneurial finance)? This is a very interesting question and the answer is not as easy as it may seem. The question can be answered in two different ways: institutionally and environmentally (see Figure 1.1).

Figure 1.1. Corporate finance versus private equity finance.

Corporate finance, which is the most traditional way to fund firms, is more standardized, less flexible, and focused on debt. Expected returns are lower and linked to the costs that financial institutions incur while collecting ...