Growth equity has become one of the hottest corners of the private capital industry, as ever-larger companies eschew public markets and find strong demand among investors desperate for higher-returning bets.
The investment strategy has long existed as a vibrant yet ill-defined halfway house between traditional venture capital firms that acquire small stakes in nascent companies, and private equity funds that usually buy more mature ones outright.
But torrential inflows into private markets from investors seeking alternatives to mainstream stocks and bonds have helped buoy dedicated growth equity funds — which typically finance well-established but still younger, fast-growing private companies in return for minority stakes — and transform them into a larger and more distinct asset class.