Venture capital company is a professional investment company, consisting of a group of people with knowledge and experience in science, technology and finance. It obtains the equity of the investment company through direct investment and provides funds to those who need funds (the invested company).
Venture capital is a form of private equity investment. Venture capital company is a professional investment company, consisting of a group of people with knowledge and experience in science, technology and finance. It obtains the equity of the investment company through direct investment and provides funds to those who need funds (the invested company). Most of the funds of venture capital companies are used to invest in new ventures or unlisted enterprises (although laws and regulations have greatly relaxed the use of funds), and they do not aim at operating the invested company, but only provide funds and professional knowledge and experience to help the invested company obtain greater profits, so they are high-risk and high-return enterprises that pursue long-term profits.
Venture capital is called venture capital because there are many uncertainties in venture capital, which bring great risks to investment and its return. Generally speaking, venture capital is invested in high-tech start-ups. The founders of these enterprises have excellent technical expertise, but lack company management experience. Another point is whether a new technology can be transformed into an actual product and accepted by the market in a short time, which is also uncertain. There are other uncertainties that lead people to think that this kind of investment is risky, but it is undeniable that venture capital has a high rate of return.
Perhaps the most familiar but least known investment risk is market risk. In a highly liquid market, for example, in stock exchanges around the world, the price of stocks depends on the relationship between supply and demand. Suppose that if the demand for a specific stock or bond rises, the price will rise accordingly, because every buyer is willing to pay more for the stock.
Venture capitalists are both investors and operators. Venture capitalists generally have a strong technical background and professional management knowledge. This kind of knowledge background helps them to understand the business model of high-tech enterprises and help entrepreneurs improve the operation and management of enterprises.