what is a venture capital fund? The so-called venture capital fund is a fund that only engages in venture capital. VentureCapital (VC for short), also translated as "venture capital" in China, is a new type of investment widely popular in the world today.
Venture capital funds absorb funds from institutions and individuals in a certain way, and invest in emerging, rapidly developing enterprises with great competitive potential that do not have the qualification for listing by means of equity investment, so as to help the invested enterprises mature as soon as possible and obtain the qualification for listing. Once the company's shares are listed, venture capital funds can recover their funds through the transfer of equity in the securities market and continue to invest in other venture enterprises.
characteristics of venture capital funds
1. investment targets: mainly small, emerging or unincorporated high-tech enterprises that are not qualified for listing.
2. investment cycle: generally 2-5 years.
3. Return on investment: quite high, averaging 2%-4%.
4. investment purpose: to inject capital or technology, acquire part of the equity (not for holding shares), promote the development of the funded company, and make the capital increase and the stock rise profitable.
5. Profit-making method: the enterprise goes public or transfers its equity.
6. Investment stage: initial stage of enterprise development and expansion stage.
the issuance method of venture capital funds
one is private venture capital funds. Generally, it is initiated by a venture capital company with a capital contribution of about 1%, which is called General Partner (GP) and assumes unlimited liability. The remaining 99% is called Limited Partner (LP), which absorbs the capital contribution of individuals, enterprises, financial and insurance institutions and other institutional investors. Like the shareholders of a joint stock limited company, it only assumes limited liability.
The other is a venture capital fund that is publicly raised and circulated to social investors. The purpose is to attract the public's attention and support the venture capital of high-tech industries, which not only satisfies their desire for high-risk investment, but also gives them high returns. This kind of fund, equivalent to industrial investment fund, is closed and can be freely transferred when it is listed.
the purpose of venture capital is to enlarge the invested enterprise by investing and providing value-added services, and then withdraw through public listing, mergers and acquisitions or other means, so as to realize the value-added realization of its investment in the flow of property rights. Venture capital is not only a win-win situation, but also a risk shared by both parties, which fully embodies the characteristics of high risk and high income of venture capital industry. The industries that attract venture capitalists most are those that are growing rapidly and have excess profits.