In very short, VCs are in with you for the longer term as you build your enterprise. PEs are looking for the money they can make from your organization on a much faster flip.
It's not that one is good and the other bad. It's that you go to them - or they look with interest at you - based on what they are trying to achieve for their investors.
Now enter the Hedge Funds. In an interesting - and somewhat disturbing - article in the New York Times today, it turns out that Hedge Funds are starting to take the place of banks in lending money to mid-sized businesses.
After all, the banks aren't lending these companies the money - so someone has to. And Hedge Funds are. Even some of the PEs are getting into the act.
That's the good part.
The not so good part is that the Hedge Funds are charging comparatively usurious interest rates (12.5%) and bring the same orientation to your organization's future as a PE fund.
There's even concern that the Hedge Funds - a pretty much non-regulated player in the financial arena - may cause the next economic meltdown as they grow their (and your) debt to astronomical heights.
So, as you look at what you need, put the Hedge Funds into your thinking - but, as always, ask yourself:
How much does this money really cost?
VCs, PE and the Cash Infusion Question (OA)
Bank Said No? Hedge Funds Will Fill a Void in Lending (NYT)