First, there are problems in the operation of the invested enterprise, failure in starting a business, bankruptcy liquidation of the enterprise and waste of investment funds.
Second, the invested enterprise did not go public successfully or was merged. There is no premium for investors to recover their funds.
Third, industry risk and policy risk, the adjustment of the industry and national policy in which the invested enterprise is located makes it difficult for investors to recover their funds.
The above points are the problems that our organization needs to solve when selecting projects, conducting due diligence and helping enterprises to grow in the later stage. It is also something investors should consider. So it depends on the market, capital, mobile technology, business model, motivation and team of the invested enterprise. Choose which projects are worth investing through these points.
As a wealth manager, the projects you choose to invest in are generally based on profitability, security and liquidity.
But when it comes to equity investment, I will analyze his disadvantages or risks from the following points.
1, liquidity risk.
2. Uncertainty of return
3. The safety of the client
1, liquidity risk, from the customer's point of view, the biggest uncertainty of equity investment is also liquidity, so general products will be rated as radical. Because of the uncertainty of listing or merger of investment enterprises, the growth cycle of general enterprises is 3 to 5 years or even longer. The client's funds are locked inside and cannot be withdrawn halfway. Therefore, the equity investment of a single project faces great liquidity risk.
2. The risk of equity investment is also reflected in the uncertainty of income, that is, when and what kind of income will be uncertain. Because of these uncertainties, there are risks. Risk management is also the management of future uncertainty.
3. From the perspective of security, if the equity is invested in a single project, the project may fail, resulting in the loss of principal.
Due to the uncertainty of income, poor liquidity and possible loss of principal, the risk level of equity investment is high, so any investment needs to consider these risks. And what we have to do is how to minimize the risk. Therefore, it is necessary to allocate assets reasonably, avoid risks and obtain steady income.
FOF mode of parent fund investing in sub-fund is a risk-avoiding mode because of the above risks in equity investment or single project investment.
Its disadvantage lies in the problem of double charges: the parent fund invests in the sub-fund, so it involves the cost problem. The first is the product subscription fee of 1% to 2%, which is divided into internal and external prices, followed by the parent fund management fee and the sub-fund management fee, and there is a problem of repeated charges. Generally, private equity funds will charge management fees, and the cost required for fund managers to manage funds is generally 1% to 1.5% per year. Generally speaking, well-known single fund customers have high subscription fees and high management fees. The parent fund has a scale and can relatively reduce the cost in the negotiation. But in order to avoid risks, it is understandable to charge some fees. Why else would professionals help others?
The "28" rule in the field of equity investment is obvious, so when we choose the fof parent fund, we should choose the top 20% sub-fund institutions of the parent fund to cooperate. Refer to Zero2IPO and vote ranking for details. Of course, you can invest in the top 20 institutions in the world, which are basically profitable. Secondly, it depends on whether the management organization of the parent fund has strong resources and contacts and the ability of risk control and management. Thirdly, it depends on the service ability in post-investment management and whether the investment progress can be disclosed to customers in time. The management scale of the parent fund should at least exceed10 billion, and whether it has influence in the industry depends on this. Again, it depends on whether the platform has the ability to allocate assets. If you look at the project according to the idea of asset allocation, whether it can meet your risk preference, whether there are liquidity arrangements and so on. Finally, choose an industry that you are familiar with, or an industry with prospects in the future. The specific projects also depend on it.