Basic History of Private Equity and Venture Capital

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The history of venture capital goes hand-in-hand with private equity and when one goes way back in history, the actual industry of private equity came into existence back in 1946. From that time moving forward, there were ups and down cycles that took place. Originally it was families and organizations that were considered to be wealthy that would reach out to become involved in providing private equity to companies that showed promise.

This began to take place between 1946 and 1981. Then, during the period between 1982 and 1993, the industry saw an substantial growth in leverage buyout that was funded through what was called junk bonds.

Then from 1992 to 2002 there was the savings and loan incident problems with insider trading and the collapse of the real estate market, plus the 1990 recession. What took place in the 1990s with the regulation for institutional investors in Europe held a great deal of significance. This basically set the scene going forward for private equity and venture capital.

Moving up to modern day times looking back over the last 15 years, new European regulations have taken some of the interest in investments away from investors who are capable of becoming involved in venture capital. Experts have given many reasons why the returns have been so poor, such as the economy being stagnant and that Europeans in general do not want to take risks.

However, there still remain some staunch venture capitalists throughout Europe who don’t seem to be shaken up by these opinions. European venture capitalists are just beginning to recover from the financial crisis that has been experienced over the years. It is now beginning to show that even though the economy appears to be stagnant, there is still a growth taking place. More attention is being paid to the Northern countries of Europe as well as the Eastern countries such as Poland and the Baltic republics which are showing a healthy economy.