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Private Equity Investments, as Compared to...

At Alten Capital we connect with companies with varied maturity levels, from super young organizations, to mature corporations. As companies evolve, they need different capital solutions to scale and continue to grow.

We want to share an oversimplified approach to private capital raising for small companies to provide a framework of how a founder can think of their capital needs based on the maturity stage of their business. Not all cases will fit into this super simple viewpoint, but let's take a crack at it.


Angel Investments vs Venture Capital vs Private Equity


When founders start a business they do not have revenue streams in place and are looking for product-market fit. They typically have an unproven business to start. It is common at this stage to raise capital from friends and family members, or from angel investors. This initial category of investors are the ones that back an unproven idea with potential. Angel investors are not typically organized into firms but invest independently. These would be the smallest checks a founder gets early on.

As the business proves itself, and the company finds some product-market fit, customers start to pay for the company's products or services and the business starts to have revenue. Founders may be burning cash at this point but unit economics potentially are good enough to scale the business. Regardless of the stage (seed, series A, etc), venture capital firms are the ones stepping in to back strong founders and high-potential ideas that show traction to take the company to the next level. Venture capital checks can range from single millions to low double digits, depending on multiple factors.

Lastly, as the business continues to scale generating revenue, and deriving profitable activities, private equity steps in to help the company continue to scale. Alten Capital fits clearly into this "profitable growth" stage by investing in profitable high-growth technology services companies. Valuations and investments are higher at this stage compared to the prior two stages mentioned.

We hope this uncomplicated view can help founders decide when to reach out to us to build a partnership. At Alten Capital we want to support founders and management teams scaling technology services businesses.