Private equity is money that is invested into companies that are not publicly traded. The money may be invested at various times during the companies existence. Funds may be provided during its initial start up days, or be provided for specific expansion or purchase of equipment. The source of private equity is usually through individual investors and the use of a Private Placement Memorandum, which is similar to a simplified prospectus used in initial public offerings where the terms of the offering are stipulated. Private equity can be invested in exchange for an ownership position of the company or a promise to pay by the company or entrepreneur

Venture Capital Funds
Venture capital funds are the most commonly considered form of private equity. Venture capital funds refer to equity investments that are made into companies that are in the early stages of development and research. Venture capital funds can be invested into any type of company, but are often associated with biotechnology and technology companies. Given when the investments are made and the type of companies they are investing in, often with unproven technology or product, the risk associated with this type of investment is high, requiring a potential rate of return to compensate for the risk.

Growth Capital Funds
Growth capital funds are equity investments made into private companies who are relatively mature and established in their sector. Growth capital funds are often used to expand or restructure the operations of the company when the principal owner of the company may not want to shoulder the financial burden alone.

Mezzanine Capital Funds
Mezzanine capital funds are subordinated debt or preferred equity securities that while senior to the common equity, are the often the most junior component of a company's overall capital structure. This type of private equity is often used by smaller companies who cannot access the high yield market, but still provides an opportunity for capital beyond what they could secure from banks or traditional lenders.