VC, an industry term, refers to venture capital. VC means venture capital, which refers to the investment behavior of venture capital companies to invest the raised funds in industries and industries that they think can make money. For example, Rand in the United States, Zero2IPO in China, etc., most of their investment methods are to invest in a company, participate in the operation, make the company's assets increase rapidly, and then seize the opportunity to recover the investment and make profits by selling assets or stocks. The VC position in the company is equivalent to the investment director, responsible for VC projects.

I. Types

New venture capital methods are constantly emerging, and there are many subdivision standards for venture capital. According to the different development stages of enterprises that accept venture capital, we can generally divide venture capital into four types.

1. Seed capital

2. Start-up funds.

3. Develop capital.

4. Venture capital.

Second, the operation process

The operation of venture capital includes four stages: financing, investment, management and exit.

Solve the problem of "where does the money come from" in the financing stage. Usually, the sources of venture capital include pension funds, insurance companies, commercial banks, investment banks, large companies, university endowment funds, wealthy individuals and families. In the financing stage, the most important problem is how to solve the arrangement of the rights and obligations of investors and managers and the distribution of interests.

Solve the problem of "where did the money go" in the investment stage. Professional venture capital institutions invest their venture capital in startups with great growth potential through a series of procedures, such as project preliminary screening, due diligence, valuation, negotiation, clause design and investment structure arrangement.

Solve the problem of "value appreciation" in the management stage. Venture capital institutions mainly realize value-added through supervision and services. "Supervision" mainly includes participating in the board of directors of the invested enterprise and replacing the management team members when the performance of the invested enterprise fails to reach the expected goal. "Service" mainly includes helping the invested enterprise to improve its business plan and corporate governance structure, and helping the invested enterprise to obtain follow-up financing. Value-added management is an important aspect that distinguishes venture capital from other investments.

The exit phase solves the problem of "how to realize the benefits". Venture capital institutions mainly withdraw from invested start-ups through IPO, equity transfer, bankruptcy liquidation and other means to realize investment income. After withdrawal, venture capital institutions also need to distribute the investment income to investors who provide venture capital.

Third, the way

Venture capital generally operates in the form of venture capital fund. The legal structure of venture capital fund is in the form of limited partnership. As a general partner, venture capital company manages the investment operation of the fund and gets corresponding remuneration. In the United States, limited partnership venture capital funds can get tax incentives, and the government also encourages the development of venture capital in this way.

Four. guidelines

1, a potential market.

2. Technology is aimed at market demand.

3. Market advantage can be established

4. Be a market leader.

5. The management is talented and far-sighted.

6. There are rich returns

Verb (abbreviation of verb) characteristics

1. The investment targets are mostly small and medium-sized enterprises in the initial stage, mostly high-tech enterprises;

2. The investment period is at least 3-5 years, and the investment method is generally equity investment, which usually accounts for about 30% of the equity of the invested enterprise, and it does not need a controlling stake or any guarantee or mortgage;

3. Investment decision-making is based on high specialization and procedure;

4. Venture capitalists generally actively participate in the operation and management of invested enterprises and provide value-added services;

5. In addition to seed financing, venture capitalists generally meet the financing needs of the invested enterprises in the future development stage;

6. Because the purpose of investment is to pursue excess returns, when the invested enterprise adds value, venture capitalists will withdraw their capital through listing, mergers and acquisitions or other equity transfer to realize added value.

Sixth, characteristics

Venture capital is an investment activity consisting of capital, technology, management, professionals and market opportunities. It has the following six characteristics:

1, actively participate in the investment of emerging enterprises in the form of investment for equity;

2. Assist in enterprise management and participate in major decision-making activities of enterprises;

3. High investment risk and high return; And professionals carry out various venture capital cycles;

4. Pursuing the early recovery of investment is not aimed at controlling the ownership of the invested company;

5. The relationship between venture capital companies and entrepreneurs is based on mutual trust and cooperation;

6. Investment targets are generally high-tech and high-growth potential enterprises.

Seven. interlinkage

1, looking for investment opportunities

Investment opportunities can come from venture capital enterprises, entrepreneurs or third parties.

2. Preliminary screening

According to the investment proposal submitted by the entrepreneur, the venture capital enterprise conducts a preliminary review of the project and selects a few interested people for further investigation.

3. Investigation and evaluation

Venture capitalists will spend about six to eight weeks to conduct a very extensive, in-depth and detailed investigation on investment proposals to test the accuracy of the materials submitted by entrepreneurs and find important information that may be missed; While understanding the investment projects in an all-round way, we should analyze the management, products and technology, market and finance of the investment projects according to various information, so as to make investment decisions.

4. Seek the same investor.

Venture capitalists usually look for other investors to invest together. This can increase the total investment and spread the risks. In addition, through the syndicate, we can share the experience of other venture capitalists in related fields and achieve mutual benefit.

5. Negotiate investment conditions.

Once investors and financiers have reached an understanding on the key investment conditions of the project, venture capitalists, as leading investors, will draft an "investment clause list" and make initial investment commitments to entrepreneurs.

6. Final transaction

As long as the facts are clear and the terms and details of the transaction are agreed, both parties can sign the final transaction documents and the investment will take effect.

Eight. evaluate

First, they require the internal rate of return (IRR) of investment projects to be greater than 25% after deducting expenses.

In addition, the investment opportunities they hope to obtain are: they can grow into a startup company of a certain scale in a few years, and they can strike a balance between the required investment and the final return (merger or IPO exit), namely, four points:

(1) The scale of the company with certain potential;

(2) investment period;

(3) Return on investment;

(4) Exit through merger or IPO.

Matters needing attention

1, incentive effect

Judging from the market supply and demand of venture capital and its influence on economic development, venture capital provides industrial financial support for technological innovation, and the government establishes institutional guarantee for venture capital. It stimulates technological innovation, promotes the optimal combination of production factors and promotes economic growth. At present, China's venture capital is not perfect in terms of capital scale, investment industry, policy fluctuation, legal environment and supporting system. We should learn from the successful experience of developed countries and combine the national conditions to stabilize the sources of venture capital and guarantee the funds for technological innovation. Guide the market mechanism of venture capital and realize the relative balance between supply and demand in venture capital market; Gradually improve the risk system environment and stabilize the expectation and investment of venture capital.

2. Lag effect

This policy has a significant impact on the development of venture capital scale in China, but the effect is limited. Policies also have a significant impact on the innovation rate of venture capital, and the effect is immediate. Government investment has always been the main factor affecting the innovation rate of venture capital, but its role is changing. Due to the problem of policy supply, the policy did not promote the increase of the proportion of venture capital investment in science and technology enterprises; The optimization of economic environment, the improvement of legal system and the improvement of tax system are becoming important factors affecting the innovation rate of venture capital at present and in the future; The lack of venture capitalists and the lack of environment to cultivate, attract and stimulate the enthusiasm of venture capitalists are the biggest restrictive factors affecting the innovation rate of venture capital in China.