Private Equity
Private equity firms buy companies, improve them, and sell them for a profit in this type of transaction.
What is a leveraged buyout (LBO)?
Venture capital firms provide funding to startups in exchange for this.
What is equity?
This metric calculates the return an investor gets on an investment.
What is return on investment (ROI)?
The term for land and anything permanently attached to it.
What is real estate?
The city known for having the most expensive real estate market in the U.S.
What is New York City?
The two primary ways private equity firms exit an investment.
What are an IPO and a sale to another company (or secondary buyout)?
The round of funding where a startup raises money before having a proven business model.
What is seed funding?
The standard multiple used to evaluate a company's valuation relative to earnings.
What is EBITDA multiple?
A property that generates income, such as an apartment building or office space.
What is an investment property?
A market where home prices are rising due to high demand and low supply.
What is a sellers market?
This private equity giant was co-founded by Stephen Schwarzman.
What is Blackstone?
The stage at which a company is typically valued at over $1 billion.
What is a unicorn stage?
This term refers to how long it takes for a private equity firm to recoup its initial investment.
What is the payback period?
The type of property classification that includes malls and office buildings.
What is commercial real estate?
The term for when a property loses value over time.
What is depreciation?
Private equity firms raise money from this type of investor, which includes pension funds and wealthy individuals.
What are limited partners (LPs)?
This venture capital firm was an early investor in Facebook, Airbnb, and Instagram.
What is Andreessen Horowitz (a16z)?
Venture capitalists look for companies with a high burn rate but also this, which measures potential future profits.
What is customer lifetime value (CLV)?
The process of evaluating a property's value.
What is an appraisal?
This type of financing allows a homebuyer to secure a mortgage with a low down payment.
What is an FHA loan?
The name for the fee that private equity firms charge to manage investor money, often structured as "2 and 20."
What are management fees and carried interest?
This term describes when a startup raises money at a lower valuation than in a previous round.
What is a down round?
This metric compares the amount of money a startup spends to acquire a new customer with the revenue it generates from that customer.
What is customer acquisition cost (CAC) vs. lifetime value (LTV)?
The legal document that transfers property ownership.
What is a deed?
The act of purchasing a property in an underdeveloped area with the hope it will appreciate.
What is speculation?