It's time to start investigating the six deals of private equity. Let's start with venture capital. Venture capital means seed financing, startup financing, and early growth financing. Let's start with the first one, which is seed financing. It’s probably the most complex, the most risky, and the most difficult business for private equity investors. First of all, what is seed financing? The definition is simple. Seed financing is the financing of an R&D project willing to generate a patent that could be transformed into a product. The definition is simple, but we have to analyze very deeply into the details. First of all, we said it’s the financing of an R&D project. It means that sectors eligible for seed financing activity typically are biomedical, chemical, IT, pharmaceutical; in these sectors it really makes sense to talk about seed financing. The other aspect is related to the fact that aim of an R&D project is not to generate the product, but to generate a patent, and the patent could be transformed into a product. As you can understand the risk is very high in these cases. First of all because we have a research project and second, because we have to get to a patent. And even if we have a patent, the patent has to be transforming into a product. Just to give an idea, statistics from the market say that in seed financing we must have in mind the three numbers: 100, 10, and 1. If you want to be a seed financier you have to screen one hundred projects, you can finance only ten, and only one will be successful. That's very clear to give an idea about the very high level of risk of an R&D project. For this reason, in many cases, private equity investors are not able to invest, and other sources of financing like business angels or also charities and donors are able to provide money to researchers willing to develop a project within this sector. Let's move to the second deal. The second deal is startup financing. The definition, again, is simple. Startup financing is the providing of money to a company willing to buy fixed assets and working capital to turn the key and to start the entrepreneurial activity. The start is completely different from seed. In this case, we have a business idea, we have a project, we have a business plan. The entrepreneur or the entrepreneurs need money to start the activity. However, the risk remains absolutely high as the private equity investor is going to bet on a business plan and to bet could sometimes be very risky. For this reason, the private equity willing to invest in a startup has to negotiate in a very tough way without the different solutions to protect his or her investment. Just to give an example, a very common way to protect the private equity investor is to negotiate a put option. That means, if the business plan is not successful, if the business is not successful, the private equity investor can use the put option and to sell the share to the entrepreneur itself and to receive money back. Obviously the entrepreneur must have money, otherwise to have a put option in your hands could be nice, but not successful. The third business is related to early growth financing. If we want to use the label of practitioners, early growth financing is the financing of the day after. It doesn't mean it's financing given twenty-four hours after the startup, but it means that it's an intervention of the private equity in the phase after the startup. What happens in this case? When an entrepreneur launches a startup, the entrepreneur has got a certain idea of a business plan. But when the entrepreneurs start operating, the world is completely different and this generates a gap in terms of money. If the amount of money of this gap is not huge, the banking system could give some money to fill the gap. But if the gap is very huge, it's very difficult that the banking system is going to give money. In this case, you need an equity investor. But the role of the private equity investor is not simply to provide money. But the role of the private equity is to be hands on. That means to help the entrepreneur write the business plan again, to analyze the reason of this gap, and to launch the activity of the company again. So the three deal, seed, early growth, and start up, represent, all together the cluster of venture capital financing.