Final answer:
Venture capital firms invest in early-stage companies that have high growth potential, providing funding and guidance. Private equity groups invest in established companies, aiming to increase their value through various strategies.
Step-by-step explanation:
Venture capital firms and private equity groups are both involved in making financial investments, but there are some key differences in how they work.
Venture capital firms invest in early-stage companies that have high growth potential. They typically provide funding to startups and small businesses in exchange for equity or ownership. Venture capitalists not only provide financial support but also offer guidance and expertise to help the company succeed.
On the other hand, private equity groups focus on investing in established companies that have the potential for significant growth or restructuring. They usually invest large sums of money to acquire a controlling stake in the company. Private equity groups aim to increase the value of the company through various strategies such as operational improvements, cost-cutting measures, and expanding into new markets.