In the context of private equity, the curve is formed by plotting returns generated by a private equity fund against time from inception to termination. There are usually negative returns (due to start-up costs and management fees) in the early years and investment gains in the outlying years as the portfolio of companies matures.

The J curve is a graphical representation depicting a phenomenon where an initial decline is followed by a significant rise, forming a shape similar to the letter "J". In economics, it often illustrates the short-term effects of a currency devaluation on a country's trade balance. Initially, the trade deficit worsens as import prices rise and export revenues lag. Over time, however, exports become cheaper and more competitive internationally, leading to an improvement in the trade balance. The concept is also used in other fields, such as medicine, where it can describe the relationship between certain variables, like blood pressure and health outcomes, where initial negative effects precede eventual positive gains.