In the field of venture capital funds, there is also a great advantage of "supporting development". The Ministry of Commerce will work with relevant departments to revise the laws and regulations related to venture capital, and the Foreign Investment Department of the Ministry of Commerce has put this topic on the work agenda. In addition, the China International Investment Promotion Committee with the background of the Ministry of Commerce will now formally set up a special working committee to provide services for venture capital funds.
(1) enterprise funds
This is a company fund. The fund is established through a registered joint-stock company or a venture capital company with limited liability system. The company has no management team, and the overall management company is entrusted to operate professionally. Corporate funds have a governance structure similar to ordinary companies. A large part of the decision-making power of funds lies in the board of directors composed of investors, and the board of directors has greater right to know and participate.
In today's business environment in China, enterprise funds are more easily accepted by investors. Its disadvantage is that the problem of repeated taxation cannot be avoided, and the decision-making efficiency of major issues in fund operation is not high. China Merchants initiated the "corporate fund" model in China, and now manages 5 corporate funds.
Generally speaking, corporate fund is a rigorous and steady fund form, which is suitable for the current national conditions and market integrity.
(2) Contract funds
Contract fund is a non-corporate fund. Among foreign private equity funds, commitment funds are the most common. When the fund is established, fund investors usually promise the amount of capital contribution to the manager, and then receive 10% of the funds in advance, and the rest will be gradually put in place according to the project progress. The decision-making power of committed funds is generally at the manager level, with high decision-making efficiency, and the fund itself can be used as the tax-exempt subject.
The establishment of domestic commitment funds is different. For example, in the form of capital contribution, after the fund investors sign the commitment agreement, the advance funds are generally not paid, and all the funds are in place as the project progresses.
Due to the lack of cash arrangement and penalty mechanism for breach of contract, such funds have to bear the risks of investors' investment integrity and project cooperation, but this simple fund model is favored by private capital, and many private capital cooperates with venture capital institutions through commitment system.
(3) Trust funds
Trust fund is a collective investment tool, commonly known as "equity trust investment plan", in which venture capital management institutions cooperate with trust companies to raise funds by initiating the establishment of trust benefit shares, and then invest and operate.
Trust companies and venture capital management institutions form decision-making committees to make joint decisions. In the internal division of labor, trust companies are mainly responsible for the custody, liquidation and risk isolation of trust property, and venture capital management institutions are mainly responsible for the management, application and liquidation of trust property.
The establishment and operation of trust funds should not only be strictly in accordance with the Trust Law, but also take into account the relevant requirements of the Company Law and the Securities Law to avoid conflicts between trust investment and relevant laws and regulations.
In the initial stage of trust fund development, the cooperation between trust companies and venture capital management institutions can fully realize complementary advantages and resource sharing, and ensure the security and profitability of equity investment trusts. Hunan Trust has cooperated with Shenzhen Chen Da, Jiangsu Guo Xin and China Merchants to issue trust funds.
(4) Partnership funds
This is the mainstream foreign private equity fund model, which regulates the responsibilities and obligations of general partners (managers) and limited partners (investors) in the form of special rules (investment agreements) and realizes the assimilation of values, which has strong vitality.
Partnership private equity fund is a bold innovation. The core of partnership private equity fund is to construct "high risk and high return" rules of the game for fund managers, and to prevent moral hazard and insider control. As a general partner, the manager should bear unlimited responsibility for the fund, and must be diligent and conscientious in order to ensure his own income and avoid the burden of "lifelong debt".