Private financing is a very broad concept, which refers to the investment in any kind of equity assets that cannot be traded freely in the stock market. Passive institutional investors may invest in private equity investment funds, which are then managed by private equity investment companies and invest in target companies. Private equity investment can be divided into the following categories: leveraged buyout, venture capital, growth capital, angel investment, mezzanine financing and other forms. Private equity investment funds generally control the management of the companies they invest in and often introduce new management teams to enhance the company's value.

China's so-called fund should be called securities investment fund accurately. These Public Offering of Fund are strictly supervised by the CSRC, and their investment direction and proportion are strictly limited. Most of them manage tens of billions of dollars.

Private placement is strictly restricted in China, because it can easily become "illegal fund-raising". The difference between the two is: whether to raise funds for the general public, whether the ownership of funds has been transferred, and if the number of fund-raisers exceeds 50 and is transferred to personal accounts, it is classified as illegal fund-raising and a very serious economic crime.