What does VC, PE and angel investment mean? What is the difference?

VC、PE和天使投资是什么意思?有什么区别?

Haizhu Website: Author originating network: Ted Prince 2019-02-03

Part 1

Article introduction: Angel investment is a kind of VC venture capital. Venture capital generally has a large amount of investment, and it is also invested in management while investing funds, and will gradually increase investment with the development of the invested enterprises. Although PE and VC are both investments in pre-IPO companies, they are very different in terms of investment stage, investment scale, investment philosophy and investment characteristics.

What do VC (risk investment) and PE (private equity investment) and angel investment mean?

1. VC venture capital

1) VC concept and operation mechanism VC (Venture Capital), also known as “start-up investment” refers to an equity capital invested by professional financiers into emerging, rapidly developing and highly competitive enterprises. High-tech and knowledge-based, production and management of technology-intensive investments in innovative products or services.

Venture capital invests venture capital in the early stage of the development of venture enterprises. After its development is relatively mature, it will convert the invested capital from equity to capital form through the market exit mechanism to recover the investment. The operation process of venture capital is divided into financing process, investment process and exit process.

2) The role of venture capital Venture capital is an incubator for the growth of enterprises and the transformation of scientific and technological achievements. Mainly manifested in:

a) Financing function: Venture capital provides urgently needed funds for innovative enterprises to ensure the continuity of funds for entrepreneurship.

b) Resource allocation function: There is a strong evaluation, selection and supervision mechanism in the venture capital market. The economic value of industrial development can be evaluated and confirmed through the market to achieve the survival of the fittest and improve the efficiency of resource allocation.

c) Property flow function: The venture capital market provides an efficient and low-cost conversion mechanism and flexible and diverse M&A methods for the property rights flow and reorganization of innovative enterprises, promotes the optimization of innovative enterprise asset portfolios, and enables assets to have a fuller flow. Sex and investment value.

d) Risk pricing function. Risk pricing refers to the determination of the price of a risky asset. It reflects the functional relationship between future earnings and risk brought about by capital assets. Investors can refer to the various asset prices offered by the venture capital market and make investment choices based on individual risk preferences and individual expectations. It is through this function that the venture capital market plays a role in the accumulation and allocation of capital resources.

Please continue to see the second part.