Venture capital is a form of private equity investment. Venture capital company is a professional investment company, composed 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).
Private equity ("PE") is also private equity investment. From the perspective of investment mode, it refers to the equity investment in private enterprises, that is, unlisted enterprises. In the process of transaction implementation, the future exit mechanism is considered, that is, through listing, mergers and acquisitions or management buyback, the shares are sold for profit.
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In terms of fund raising, it is mainly raised by a few institutional investors or individuals in a private way, and its sales and redemption are carried out by fund managers through private consultations with investors. In addition, the investment method is also carried out in the form of private placement, which rarely involves the operation of the open market and generally does not need to disclose the details of the transaction.
Most of the funds of venture capital companies are used to invest in start-ups or unlisted enterprises (although the current laws and regulations have greatly relaxed the use of funds). 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.
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