How do private equity funds raise funds 1 Judging from the development of private equity funds in various countries, government funds have become one of the important sources of funds for private equity funds because of their financial stability and high credibility. For example, American small business investment company is a typical example of government funding to promote the development of small and medium-sized enterprises. In order to promote the development of small and medium-sized enterprises, the United States established a small business administration through legislation, part of which was provided by the government, and attracted private capital such as individuals, pension and other institutional investors to set up small and medium-sized enterprise investment companies. In addition, in order to promote the development of Japanese venture capital industry, the government also directly invests in venture capital. Generally speaking, the main purpose of the government to set up or participate in private equity funds is not only to make profits, but also to cooperate with its industrial policies, actively guide the market and promote employment and economic development. Especially when some emerging industries or high-tech industries are in the seed stage, because of the uncertain market prospects, not only banks have difficulties in financing, but even venture capital funds are discouraged. At this time, the role of government funds can help guide market funds to flow to these industries. From the international situation, the governments of Britain, Japan, Singapore and Israel all directly participate in private equity funds, and to some extent interfere with the investment behavior of funds. In addition, government departments can also use their quasi-financial funds or reserve funds to invest in private equity funds. For example, China Investment Corporation, established on September 29th, 2007, is a wholly state-owned company specializing in the investment management of foreign exchange funds. The Ministry of Finance of China purchased foreign exchange reserves equivalent to US$ 200 billion as the registered capital of CIC by issuing special national debt financing/KLOC-0.5 trillion yuan. 2. Institutional investors Institutional investors are also an important source of funds for private equity funds. The so-called institutional investors refer to institutions that use their own funds or raise funds from scattered people to engage in investment activities. Generally speaking, investment companies, insurance companies, pension funds, various social welfare funds, banks and other financial institutions are common institutional investors. From 1978 to 2003, among the sources of venture capital in the United States, the proportion of social pension gradually increased from 15% to 60% in 1998, and then basically decreased between 40% and 45%. In Britain, pension funds have also become an important source of venture capital funds, accounting for about 44% of the total investment. 3. For strategic reasons, large enterprises want to invest the remaining funds in related enterprises. Large enterprises are usually important sources of funds for private equity funds, such as General Motors and Intel. For strategic reasons, many large enterprises will invest their remaining funds in enterprises related to their strategic interests by means of joint ventures or joint ventures. With the deepening of large enterprises' participation in venture capital, this kind of investment is no longer limited to related industries, but also turns to other industries to realize capital appreciation and profit growth. 4. Individuals with a large amount of funds also have the need to invest funds in private equity funds to obtain investment income. This kind of capital source is usually unstable and relatively small, and it is also easily affected by the economic situation of investors. Personal participation in private equity funds mainly comes from purchasing venture capital trust plans. Recently, with the growth of personal financial strength and risk-taking ability, some individual investors have participated in limited partnership private equity funds as limited partners. The fund-raising method of private equity funds usually adopts the way of commitment, that is, investors do not need to pay all the subscription quota at the beginning of the fund's establishment, but only need to make capital injection commitments and invest in several times according to the investment notice issued by the fund management company during the fund investment period. This is mainly to avoid too much idle funds. If too much money can only be put in the bank to earn interest, it will dilute the performance of the fund management company, affect the return on investment of the fund, and even affect its reputation and the next fund raising. The above is the introduction of how private equity funds can raise funds, and the financing methods can start from the above four aspects. The most common way in our life is personal finance, which usually takes the form of commitment. Simply put, investors are required not to pay the fund at one time, but to invest in several times, because one-time payment will lead to more funds being deposited in the bank, so they will earn less interest.