[GolfyMcG]

This is what a PE (Private Equity) Firm basically does from my understanding.

They are a company, that buys, (hopefully) improves, and then sells companies. For example, a PE Firm might have some expertise in mining. They hear about a company that builds some sort of mining technology. They've done pretty well so far but they've really leveled out. The PE Firm decides to buy them, install a new CEO, revise some business practices to help cut costs, and now as the same business they bought but with a better bottom-line. They then sell it.

What you're describing is like an earlier stage PE firm.

[gmarx]

That's what they are supposed to do. In practice many of them borrow a bunch of money on the acquired company's credit and funnel it to themselves before selling. It's kind of like the legal version of a "bust out" (as seen on "The Sopranos" and "Goodfellas" :)

[CPLX]

Of note: YC is a private equity firm

[mikeyouse]

Yep, Venture Capital is just a subclass of Private Equity.