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Growth Equity

Definition

Growth equity is a type of private investment that provides capital to established, growing companies — typically minority or significant minority stakes — without requiring the full buyout common in traditional PE. Growth equity firms partner with founders who want to accelerate growth, fund acquisitions, or diversify personal net worth while retaining meaningful ownership and control. Targets are generally profitable or near-profitable businesses with proven product-market fit, distinguishing growth equity from venture capital.

Context

In Ep. 20, Jake Colognesi describes Mamba Growth as a growth equity firm targeting bootstrapped, founder-owned B2B SaaS companies with $2-10M ARR, 50-100%+ growth, and 90%+ retention. Jake notes that growth equity sourcing requires reaching founders who "don't need to do anything" — they're profitable and not seeking capital — making value-first outreach especially important. He also explains that growth equity firms were among the first to leverage junior professionals for outbound sourcing, citing Summit Partners as a pioneer.

In Ep. 22, Ryan Murphy describes Norwest's growth equity approach: "We typically want to invest up to a 70% ownership stake. We want to see meaningful roll from the team, and we're trying to back operators and founders. We like being there for their second bite of the apple." This structure contrasts with full buyouts and is a key feature of minority growth equity positioning.

  • Private Equity — growth equity is a specialized subset
  • Limited Partner — the investors who provide capital to growth equity funds
  • SaaS — a common target sector for growth equity
  • Bootstrapped — growth equity often targets bootstrapped companies specifically