In order to diversify the investment risks, private equity investment is conducted through private equity investment funds (this website is referred to as PE funds, private equity funds or funds). Private equity investment funds raise funds from large institutional investors and well-funded individuals by private placement, then seek opportunities to invest in unlisted enterprises, and finally get the investment return of the whole fund through active management and withdrawal.
PE fund, like stock exchange private equity fund, is essentially a financial management tool, but its initial investment threshold is higher, the investment cycle is longer and the investment return is more stable, which is suitable for long-term investment of large-scale funds.
Theoretically speaking, although VC and PE are both investments in pre-listed enterprises, they are quite different in investment stage, investment scale and investment concept. In general, PE invests in Pre-IPO and mature enterprises; VC invests in start-ups and growth enterprises. The mentality of VC and PE is very different: VC's mentality is not to miss (good projects), and PE's mentality is not to make mistakes (referring to investment mistakes). However, today, large-scale transactions make the difference between VC and PE more and more blurred. Old VCS (such as Sequoia Capital, Jingwei Venture Capital, Peng Kai, Defengjie) who once made venture capital in Silicon Valley started to raise PE funds after entering China, and many disclosed investment transactions amounted to more than 10 million dollars. Fewer and fewer venture capitalists are willing to invest in early-stage venture projects. At present, only Taishan Investment and IDG are still investing in projects with millions of yuan. Most funds, no matter what their names are, actually mainly participate in PE investment transactions of RMB 20-200 million.