Private Equity as an Economic Driver:An Historical Perspective

Private equity has always existed, in one form or another, throughout history. This chapter identifies the key elements distinguishing private equity from other categories of investment. With a focus on venture capital, it discusses the elements necessary for the emergence of a private equity sector. Private equity offers investors the opportunity to finance the development of private companies and benefit from their eventual success. Public intervention is creating the backdrop for private equity, paving the way for a more subtle interaction, combining contracting, incentives and soft regulations. Private equity needs very specific entrepreneurs and companies to finance. Entrepreneurship is one of the most powerful supports for economic growth and prosperity in a global modern economy. Few factors have as much impact on the emergence of innovation, job creation and the contribution to a dynamic and competitive economy as entrepreneurship.