Private equity investing not for faint-hearted

Investors looking to bankroll a friend or family member’s start-up should know there is a good chance they will lose their money.

Private equity, angel investing, venture capital or just backing a mate – whatever you choose to call it – investing money in a business not listed on the stock market is high risk.

It is often the domain of wealthy individuals with portfolios worth millions of dollars.

But for smaller investors private equity funding can be a way to help out an entrepreneurial friend or family member with the hope of making some extra cash on the side.

New Zealand Private Equity and Venture Capital Association executive director Colin McKinnon said most new businesses initially relied on capital from personal savings or bank debt.

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