Explain how private market strategies draw on borrowed money at each stage of an investment's life

Venture-backed start-ups can use venture debt, which is short-term lending often paired with warrants that extends the runway between equity rounds. Growing firms use asset-based, revenue-based or expansion loans. Buyouts of mature companies rely heavily on senior secured loans, second-lien debt, high-yield bonds and mezzanine. Later in the holding period, sponsors refinance or carry out dividend recapitalisations. In distress, rescue financing and debtor-in-possession loans keep the business running. Real assets use construction loans that are refinanced once the asset is stabilised. Funds also borrow at the vehicle level, through subscription lines backed by uncalled commitments and NAV facilities backed by the portfolio. The trap: subscription lines delay capital calls and so raise reported IRR without creating any value.