Risk control of investment projects is the focus of risk control of private equity funds. If the risk of each investment project is controlled, the investment risk of private equity funds can be completely controlled. 1. Contractual restrictions and pre-agreed responsibilities and obligations of all parties are legally effective risk avoidance measures that will be taken in all commercial activities. In order to prevent enterprises from harming investors and protect investors' interests, investors will formulate various clauses in the contract in detail, such as stipulating what enterprises must and cannot do by formulating positive and negative clauses, preventing enterprises from harming investors by contractual constraints, setting clauses to protect investors' rights and interests in investment contracts and ways to realize their investment, adjusting the proportion of shares, giving priority to additional investment, and preventing shares from being diluted. 2. Sectional investment Sectional investment refers to private equity investment funds to effectively control risks, avoid enterprises wasting funds, and control investment progress in sections. The allocation of investment funds should be carried out in stages according to the progress of the project, not at one time. Only provide the funds necessary to ensure the development of the enterprise to the next stage, and reserve the right to give up additional investment and the right to purchase the shares issued when the enterprise raises additional financing first. Only when the current project works well and achieves the expected goal can the follow-up funds be followed up in time and the later projects be launched. If the enterprise fails to reach the expected profit level, the investment ratio will be adjusted in the next stage, which is a way to supervise the operation of the enterprise and reduce the operational risk. Three. Remedies for breach of contract Generally speaking, in the initial stage of project investment, private equity funds can accept the status of minority shares, while the management of the project company controls the majority shares, but investors can sign voting rights agreements with the project company to maintain special voting rights on some major issues. When the management of the project company can't operate the enterprise according to the objectives of the business plan, for example, it is found that the management violates the agreement, the information provided is obviously wrong or a large number of liabilities are found. , the project company shall bear the responsibility. In this case, private equity funds can put forward strict requirements for the project company. The usual punishment or remedial measures include: adjusting the conversion ratio of preferred shares, increasing the shares of investors, reducing the transfer of shares, voting rights and board seats to private equity funds by project companies or management, and dismissing management. Four. Adjustment of share proportion In project investment, private equity funds use complex financial instruments, such as convertible preferred stocks, convertible bonds, bonds with warrants or their combinations, to adjust the share proportion in investment, thus reducing their own risks. In particular, the use of convertible preferred shares can adjust the equity ratio between private equity funds and project companies by adjusting the priority and the conversion ratio or conversion price between ordinary shares, so as to meet the different goals and needs of private equity funds and project companies, which can not only protect the interests of investors and share the growth of enterprises, but also mobilize the enthusiasm of the management of project companies, promote the development of project companies and obtain more equity. The risk control of private equity funds should start from the source. In the initial stage of an investment project, investors should make a serious investigation and study on the investment project. In the process of investment, both parties make detailed provisions and stipulate rights and obligations. If the investment company defaults, investors can take remedial measures. If the above risk control methods are applied to a certain extent, I believe that investors' risks can be largely avoided.