Betty Liu, Executive Vice Chairman for NYSE Group, explains:

What is the difference between a private equity firm and a venture capital firm?

So, let's talk first about the similarities between a VC and a PE firm. So, they both raise capital to invest in private companies, generally are limited partnerships, and they help increase the value of companies in order to exit them. Now, VC firms, though, tend to invest in younger stage companies and startups, whereas PE firms take majority stakes in companies and those are usually mature businesses. What they do is they look for operational and cost efficiencies to make those businesses profitable.