In the U.S. election race, private equity has become a very public issue.
So much so that the usually secretive industry is stepping out from behind the scenes to defend itself in light of attacks by Mitt Romney's rivals calling the Republican front-runner a job destroyer and tax dodger because of his years leading private equity powerhouse Bain Capital.
"It's pure demagoguery, a thinly veiled assault on the 1 percent," one senior executive told The Huffington Post.
"We've gone from an obscure corner of the asset management industry to a lead defendant in the Salem witch trials," another executive told The Financial Times.
Venture capitalists, who practice a somewhat different brand of capitalism, have similarly been thrust into the limelight and forced to justify their existence. They fear that being dragged into the political mud-slinging could hurt their ability to raise funds, potentially hindering new businesses' access to cash. As such, they have their own message for American voters and lawmakers: Leave us out of it, we don't do private equity.
"Opponents of Mitt Romney are quick to call him a venture capitalist and then point to certain investments he made that may have caused job losses. But the investments they point to were actually private equity deals," said Emily Mendell, spokeswoman for the National Venture Capital Association, a bipartisan trade group.
While Romney did make investments that qualify as venture capital early in his time at Bain, the vast majority of his work there was in private equity, including some deals that resulted in substantial job losses and that call into question Romney's claim that he created 100,000 jobs during his 25-year tenure.
"VCs create something from nothing by investing in new firms, which often requires technical expertise and hands-on involvement," Mark Heesen, the NVCA's president, stated. "That's very different than what private equity investors do, which is to step in once a company is already established, take a majority stake and attempt to profit by improving the value of that company with financial engineering."
Yet because Romney often mentions his venture capital experience and his private equity experience in the same breath, voters unfamiliar with their respective practices have increasingly overlooked the distinction between the two forms of finance.
"If twisting the facts surrounding Mitt's record at Bain successfully yields an adopted belief that his 'vulture capitalist' activities are anti-American," investor Robert Frankel recently wrote, then "we need to make crystal clear that venture capitalists, who serve a vital role in the innovation economy, do not suffer the same fate."
So far, venture capitalists' efforts to distance themselves from their less popular cousin seem to be working. Buoyed by a growing belief that venture-backed startups drive job growth, venture capital fundraising in the U.S. hit $15.4 billion last year, a 10-year high, while private equity fundraising dropped to $30.8 billion, down nearly 80 percent since the industry's peak in 2007.
Despite their differences, both groups face similar risks if attacks on Romney damage their public images, including the loss of a controversial tax break and the support of their biggest customers, institutional investors like pension funds and university endowments, which are often sensitive to public sentiment.
Private equity may already be seeing the tides turn against it. Funding sources are drying up, banks are providing less debt to leverage buyouts and Washington is stepping up scrutiny of the industry as criticism of private equity's business model, which has been around for decades, steadily increases in the aftermath of the financial crisis.
Yet Romney's campaign, despite causing additional headaches for private equity, has still attracted large sums from the industry, which has helped the Republican front-runner stay ahead of President Obama so far in the race to raise Wall Street cash.