Many of you may know about private equity or even equity investments in general. You may or may not know about the different types of private equity. In this article we will cover three of the different types of Private Equity.

If you are an investor then you may already know that you should have more than one investment, and not to put all your money into a single investment. Effective Diversification is the one of the key in investment risk management.

The most common type of Private Equity that you will find would be the Angel Investment. The companies who specialize in Angel Investment will not diversify, but only normally invest it into a single or even two investments. If they only invest in one or two companies then they would put a hamper on their potential profits, and increase their risk on that particular investment.

When you choose to invest in an Angel Investment you will be investing in an investment that has been sprouting up in some of the bigger cities such as New York, and Los Angeles. There are benefits to investing in an Angel Investment are the networking investment club that is available through some of the bigger cities, and even the cost of the due diligence. But one disadvantage would be that the Angel Investment has a record of being mediocre as a result of what they call negative selection bias, and another disadvantage would be the high price that it will cost entrepreneurs to gain access to an Angel Investment Group.

The next type of Private Equity that we will go over is the becoming a ‘limited partner in a Venture Capital Account’. Some of the more respectable investment companies out there are mostly off-limits to the average high net-worth investor that you will find out there. There are several hundred smaller venture capital, and even private equity funds that will allow the average investor with an average investment to give in and invest.

Many of which will have a good record or success to go along with it. A disadvantage of investing in a venture capital fund would be that these funds tend to be on specific sectors, and not made public. The above does not provide the portfolio approach that most of the investment advisors are looking for. Also in addition these companies can charge a steep fee that can potentially cut into your investment profits.

One of the last types of Private Equity that I will talk about is the Buyout Private Equity. Buy outs are one of the largest Private Equity that you can find out there today. This category can include the leveraged buyouts, and the management buyouts. This is the category of Private Equity which is the most famous, and what makes the paper and the news the most. An example of a buyout would be the leveraged buyout of Nabisco, which was described as the Barbarians at the gate. The buyout category of Private Equity is often assumed to include both the growth and expansion, or one of the other. This category and growth together make up sixty percent of all Private Equity that there is out there today.

These are only a couple of the Investments that actually come from Private Equity. If you are planning to get in this sector then please does some research before you take that initial leap?