Equity investment (venture capital) has a bright future, but it is not suitable for the vast majority of individual investors.

There are two types of participation here. The first is to be an individual angel directly, and the second is to become an LP of a venture capital fund.

Individual investors are generally limited by funds and mainly make angel investments. Angel-stage startups basically only have a PPT and a few people, so the probability of gambling is very high.

In addition, industries are very different. For example, in the TMT field, there are so many sub-industries. Without specialized research and analysis, it is easy to be mistaken.

Even if you understand everything about TMT, there are good consumption upgrade projects, medical and health projects, etc. It’s up to you to check them out.

Institutions can give full play to the advantages of the group, but individuals are limited by their energy, experience, and knowledge, and it is very easy to fail if they invest blindly.

There is an important term in the venture capital industry called "renewal rate." When the number of investment projects reaches more than 100, the continuation rate begins to return to the normal distribution. The worst I have heard is that 48 projects were invested and 46 projects died.

A better renewal rate is probably between 30% and 50%.

But even if these 30% of companies get Series A, they may not be able to get Series B or Series C.

Five years ago, it was difficult for a company to die after raising 100 million yuan, but now with the intensive bombardment of capital, many projects have died after raising more than 100 million yuan.

In general, if you invest in 100 projects, that is, 10-20 projects will make money, and 3-5 of these projects can make most of the money.

The venture capital industry is very fateful.

I heard a real case.

At the end of 2014, two institutions paid attention to two companies in the same industry. The investors of these two institutions conducted detailed DD on both companies. The conclusion was that the founder of company A was eloquent, but relatively exaggerated.

The founder of Company B is relatively honest and very down-to-earth in his work.

Later, two institutions invested in one company respectively.

As a result, one company is almost bankrupt, and the other has a valuation of US$1.5 billion. I heard that a well-known FA is helping it raise the next round.

Individual investors who make angel investments must have a certain level of professionalism, and they must also have money. Having money means having a number of projects, and the number can, to a certain extent, make up for investors’ occasional misjudgments.

There are too many private equity institutions now. Whether you are buying private equity or choosing other financial management, you must first check whether the license is complete, the company size, investors, invested projects, etc., to protect your own interests from harm.