In business people are aware of partnerships and money lending. A Private Equity firm combines both qualities of a business partner and a money lender.
A business partner invests OWNERSHIP, i.e capital, time and skill, shares risks, and acts as much the joint owner of the business and benefits from its success, but he never does business with somebody he doesn't know because of trust issues.
A money lender is a person who provides DEBT, he lends money provided you provide collateral. He is not bothered whether he knows you or not he's willing to provide money at an interest, which is business for him, but he never takes any part in the business.
A Private Equity / venture capital firm is an entity who invests both ownership and debt or any of these, in a business.
It does all functions of a business partner, but it does not know you.
It does all the functions of a money lender, but the collateral here, is the partnership(stake) the PE / VC entrepreneur's venture.
So a PE/VC firm is an entity sans (without)the limitations of both these characters.
