Growth Equity

Investment in established, profitable or near-profitable companies to accelerate scaling.

Definition

Growth equity sits between traditional venture capital and private equity. Growth equity firms invest in companies that have proven business models, significant revenue (often $20M+ ARR), and a clear path to profitability. These investors typically take minority stakes, do not use leverage, and focus on helping companies scale rather than restructure.

Why it matters

Growth equity investment signals that your company is past the high-risk startup phase. These rounds are large and often precede an IPO by 1-3 years, meaning your equity may become liquid relatively soon.

Example

A SaaS company with $50M ARR and 40% growth raises a $100M growth equity round from General Atlantic at a $750M valuation. The company plans to IPO within two years.

Related terms

Late Stage

Companies that have raised Series C or later and are approaching IPO or acquisition readiness.

Series C

A later-stage round, typically $30M-$100M+, to expand into new markets or prepare for IPO.

Series D

A late-stage round that funds further expansion, often preceding an IPO by 1-2 years.

Private Equity (PE)

Investment firms that buy established companies, often using debt, to improve and resell them.

Initial Public Offering (IPO)

When a private company first sells shares to the public on a stock exchange.

Venture Capital (VC)

Professional investment firms that fund high-growth startups in exchange for equity.

More from Funding Rounds

This definition is an educational summary. It is not legal, tax, or investment advice. Specific terms in your equity grant or company documents may differ.