Think Private Capital is just Private Equity?
The reality is much more interesting.

While Private Equity and Private Credit are the two pillars everyone knows, a major shift is blurring the lines between them. Here's what "Private Capital" truly means today.

The Usual Suspects: Private Equity and Private Credit

First, a quick refresher. Private Equity generally covers Venture Capital, Growth Capital, and Buyouts. Private Credit is lending to companies by investment funds rather than banks, and covers Direct Lending, Mezzanine, Distressed Debt and other types of lending. It has become a powerhouse, especially in buyouts. Where banks used to be the primary lenders for Leveraged Buyouts (LBOs), Private Credit funds finance many of these deals today.

What's Missing? The Rise of Flexible Capital

Here's where it gets interesting. The term "Private Capital" now includes highly flexible funds that don't fit neatly into a "credit" or "equity" box.

These are strategies like "Special Situations" or "Tactical Opportunities". They give managers the freedom to invest anywhere in a company's capital structure. The goal is no longer just to buy a company, but to craft the smartest, most optimal investment structure for any given situation.

The most critical lesson is this: There are different parts of the capital structure (and different types of different risks) when investing in private companies!

Whether it's called Private Equity, Private Credit, or something else, what truly matters is your own due diligence on the fund’s team, strategy and investment process. Most importantly, know your personal constraints (liquidity, time horizon, taxes), and how the fund’s strategy (and risk) fits into your entire portfolio.

P.S. “Private Markets" is another term that can also refer to private investments in real assets, such as real estate and infrastructure, but we'll discuss that another time!