(Reuters) - When staffers at the National Venture Capital Association see a report that refers to U.S. presidential candidate Mitt Romney's investments as venture capital, they grimace -- and then contact the author to explain politely why it's wrong.

The Republican White House hopeful was head of Bain Capital LLC, which does the bulk of its work in private equity and not venture capital, the NVCA would clarify. Venture capital backs companies from their earliest days, and some go on to create thousands of jobs; private equity typically comes in at later stages to turn around underperforming companies, sometimes via job cuts and other unpopular cost-savings moves.

The distinction has become important as the U.S. election shines a harsh spotlight on the private equity industry, with President Barack Obama's campaign accusing Romney of slashing U.S. jobs at Bain-owned companies and outsourcing them abroad.

While Obama does not muddle venture capital and private equity, many journalists and politicians do. Venture capitalists fear those slips could tarnish their public image and lead to unfriendly tax policies and other regulations down the road.