Two gates of capital operation

Capital operation is not as mysterious as people think, but the reason is actually very simple. Capital operation is a transaction between capital and assets. Capital for assets is investment, and assets for capital is financing (as shown in 1- 1). But the assets mentioned above cover many forms of expression, including various forms of intangible assets, and it is these intangible assets that make the concept of capital operation so profound.

1- 1 All roads lead to the same goal.

Since capital operation is a kind of transaction, both parties need at least two roles: the capitalist who operates capital is called capitalist; Those who manage assets are called entrepreneurs. People often confuse the two because many entrepreneurs or capitalists have two roles. From the perspective of business model, there are essential differences between the two ways of making money. Capitalists mainly make money, while entrepreneurs mainly make money from resources. Without the transaction between the two, there is no capital operation. You can just be a capitalist, deposit your money in the bank to earn interest, or pay dividends to investment funds and make money only by money; You can also be just an entrepreneur, like a traditional farmer, craftsman or today's "knowledge family". You can only make money by resources, experience and knowledge, and rely entirely on the rolling development of operating profits. If the trajectories of these two kinds of people never intersect like parallel lines, there will be no capital operation.

Capital is like the blood of an enterprise. If the capital operation of an enterprise is compared to a building, then investment and financing are the two gates for capital to enter and exit. Funds enter from the investment gate and exit from the financing gate. In order to maintain the dynamic nature of capital operation, the two gates of capital throughput are indispensable. Some investors may disagree, thinking that they have funds, just find the door to investment, and there is no need to know where the door to financing is. Of course, if you are only content to be a small entrepreneur, this idea is beyond reproach. However, if you want to make your business bigger, or if you want your money to keep increasing in value, and there is no financing door, how can your capital chain maintain a sustainable operation? For example, if you buy a stock with the money in your hand, it is called investment, because you have exchanged your assets for capital (at the price of the stock). Even if the stock price doubled, you still didn't make any money. It's just a number game to draw cakes to satisfy hunger, because the stock price will still fall. So when can we really make money? That is, when your stock is converted into RMB, that is, when you find the next investor to convert assets into capital, this is called financing, so you actually make money in financing rather than investment.

In the process of capital movement, the most wonderful scene is not the moment of entry, but the moment of exit after capital appreciation, which is "a thrilling jump" in Marx's words. If your capital has only an entrance door but no exit door, it can only show that you are a failed capitalist: the bear broke the stick and bought a lot of assets, but he couldn't swallow it and spit it out, and as a result, he would be "choked to death" alive. If your capital only exits the door and doesn't enter it, it can only show that you are a ruined entrepreneur. After selling your fields and eating your capital, you will eventually lose everything.

Once when I was giving a lecture to EMBA students in Tsinghua, I compared the operation of capital to a temple of knowledge, telling students that there are two doors to enter this maze, one is investment and the other is financing. The student asked me what the difference was when I walked through these two doors. I said the result was no different. No matter which door you enter this hall, what you have learned is the same. In the end, all roads lead to the same goal. If you want to say that the difference may lie in the feeling of entering, you will feel that your knowledge is getting deeper and deeper through the door of investment; From the door of financing, you will feel that your knowledge is getting shallower and shallower.

Why? Not all investors involved in capital operation are tycoons in our memory. Only a few of them invest with their own money, and most of them are people who manage money for others, such as bankers, fund managers and presidents of trust and investment companies. The huge sums of money controlled by these people are all other people's money, and some even come from ordinary people in thousands of families. Only when they describe the science of investment as more difficult can most people give up, and finally they are willing to give their money to these experts to take care of. No wonder the most difficult course in MBA textbooks is investment, which is full of various quantitative models, formula axioms, table matrices and coordinate curves. You will never stop until you confuse people. According to political economy, this phenomenon is rent-seeking behavior.

Financiers are mostly entrepreneurs. They need other people's money for their own use. However, no investor will invest money in a project he doesn't understand at all and play a game he doesn't understand at all. In order to obtain funds, no matter how complicated their projects and business models are, they must tell stories that are easy to understand and can be understood by ordinary people. You know, not all investors are experts, and even experts can't be generalists in all walks of life. How can they pay for you if they don't understand?

I smiled and asked the students, which door do they want to enter this hall? Most students expressed their willingness to enter through the financing door. I understand them. After all, everyone likes to take shortcuts. Since there is a simple method, why choose a complicated one? And most of them are entrepreneurs, and their desire for financing is far greater than their willingness to invest. However, only one student stood up and said: he is willing to go in through the investment door and come out through the financing door. I immediately gave him the answer 100. This is the answer I expected: a simple explanation.

In the next chapter, let's start a simple and easy-to-understand journey. Maybe we will set foot in the investment field for a while, and then turn to the financing field. I hope readers will not be confused by this leap-forward thinking. Investment and financing are just two sides of the same coin. However, I can assure you that you don't need a high degree to understand this book. You have graduated from junior high school. Even if you don't know words, you can at least understand them by reading.