Private equity has become a significant force in the growth of technology startups. These firms do more than provide funding—they offer operational support, strategic advice, and access to leadership resources that many startups lack. As companies move beyond their early stages, they face a new set of challenges that can’t always be solved with another venture capital round. This is where private equity steps in to help companies grow in a more structured and sustainable way.
Investor Jim Rogers, co-founder of the Quantum Fund and a longtime observer of global markets, recently noted, “I think this is also a great time to invest in private equity, helping companies grow from the ground up.” His perspective reflects a broader view: that private equity, when deployed with care and experience, plays a meaningful role in helping companies build solid foundations for long-term success.
Private equity firms take a more hands-on role than most investors. They fund growth, but they also stay involved—advising on operations, helping build scalable systems, and supporting leadership transitions. For startups that need more than capital, this approach offers a clear path forward.
Private Equity’s Role in Startup Growth
As of September 2024, private equity firms in the U.S. managed $3.128 trillion in assets, according to S&P Global Market Intelligence. This signals that companies across industries are increasingly turning to private equity as a partner in long-term growth. In tech, the relationship can be especially valuable.
Private equity firms, like the one owned by this investor, typically invest in companies that are beyond the earliest stages—startups that have a product in the market and some revenue traction but need help getting to the next level. Growth equity is one common model, where the firm provides funding to speed up expansion while the founders retain operational control. In other cases, the firm takes a majority stake and becomes more directly involved in managing the business.
These firms also bring experience. Many have worked with dozens or even hundreds of companies in similar situations. That perspective allows them to spot problems early, structure deals with long-term outcomes in mind, and help founders think beyond short-term growth goals.
The terms of these deals often include clear milestones and agreed-upon goals. This structure helps both sides stay aligned on progress and reduces the risk of misunderstandings about what success looks like.
How Private Equity Supports Scaling
Startups in growth mode face tough choices: how to build infrastructure quickly, hire the right teams, and stay efficient while expanding. Many don’t have the systems or leadership in place to handle that shift smoothly. That’s where private equity support can make a measurable difference.
Capital from private equity isn’t just a cash infusion. It often comes with a roadmap. That might mean hiring plans tied to performance targets, investment in infrastructure rolled out in stages, or operational benchmarks used to track progress. The funding is purposeful and often tied to specific outcomes.
Firms also provide access to experienced operators. These are people who’ve run companies before and know how to set up the right systems—whether it’s for customer service, finance, or product development. Instead of trying to figure it all out internally, the startup gains access to proven strategies and experienced guidance.
Market expansion is another area where private equity firms provide support. They might help the company identify which regions to target, how to localize their offering, or whether to pursue partnerships instead of building everything in-house. These decisions can affect growth timelines significantly, and private equity firms bring the experience needed to make them thoughtfully.
Even in 2024, when traditional private equity fundraising slowed—down 24% for the third year in a row, according to McKinsey & Company—PE-backed firms remained active in tech. That continued investment reflects their longer-term approach. These firms don’t rely solely on short-term market conditions; they invest based on operational potential and execution.
Investment Strategies That Drive Growth
One of the most common private equity strategies for growing tech companies is providing growth capital. These investments allow startups to expand while keeping their leadership teams in place. The funding might be used to develop new products, enter a different market, or upgrade internal systems—all without changing ownership structures dramatically.
Another frequent tactic is helping startups acquire smaller companies. These acquisitions can help broaden a product offering, gain access to talent, or quickly bring in new customers. For startups, this can be a smart way to build scale without having to grow everything from scratch.
In many cases, private equity firms focus on improving how the business operates. This doesn’t always mean drastic changes. Often it’s about clarifying roles, introducing better planning tools, or tightening financial reporting. These adjustments help companies function more predictably as they grow.
Firms usually have frameworks that guide these decisions. Instead of guessing what works, they apply lessons from past investments to help the startup build solid processes. This structured approach is part of what makes private equity distinct from more passive forms of capital.
Strengthening Leadership and Talent
Scaling a company puts pressure on leadership. Founders who are comfortable managing a small, agile team might find it harder to lead a company with dozens or hundreds of employees. Private equity firms often step in to help with this transition—either by coaching founders or bringing in experienced executives to handle new responsibilities.
Bringing on a new COO or CFO isn’t uncommon. These roles can help take over operational tasks so founders can focus on product, strategy, or vision. When handled well, this transition strengthens the leadership team without sidelining the original founders.
Recruiting also becomes a major focus. A growing startup needs strong people across functions, from engineering to sales. Private equity firms can support recruitment by tapping into their networks or helping define what the team should look like at the next stage.
As companies expand, they also need new internal structures. Informal decision-making and loose reporting won’t work at scale. Private equity firms often help set up org charts, reporting lines, and performance systems. These changes can feel like bureaucracy at first, but they’re necessary for sustained growth.
Managing Risk and Planning for Exit
Scaling always comes with risk. Markets change, competitors react, and internal operations can break under pressure. Private equity firms help startups think ahead—identifying weak points in operations, forecasting financial strain, or spotting hiring bottlenecks before they create problems.
Governance is another area that tends to improve under private equity ownership. With board meetings, investor check-ins, and defined reporting requirements, the company becomes more disciplined. That structure can be especially helpful in times of uncertainty.
Planning for an exit is also a major part of the private equity playbook. Whether the goal is to go public or sell the business, PE firms work with founders to get everything in order. This might include streamlining financials, clarifying the company’s growth story, or building relationships with potential buyers.
A well-planned exit benefits everyone involved. Founders can step away—or stay on—with clarity about what comes next. Investors get a return on their capital. And the business transitions into its next phase with systems in place to support continued growth.
