Private equity is a type of investment typically reserved for companies that have already grown to a larger size and are looking for a particular growth or exit strategy that isn’t available through traditional financing.

When private equity makes sense

Most startup or small businesses have little use for private equity. Technically, venture capital is considered private equity, but for the purposes of this explanation let’s leave venture capital out of it.

If you’re a startup with just an idea, you’re likely way too early for private equity. Typically private equity firms are looking for later stage companies that require much larger sums of money, usually at least $5 million, in businesses that already have some sort of assets to leverage...