According to the definition of American National Venture Capital Association, venture capital is a kind of equity capital invested by professional financiers in emerging, rapidly developing enterprises with great competitive potential.
From the perspective of investment behavior, venture capital is an investment process in which capital is invested in the research and development of high-tech and its products with failure risk, aiming at promoting the commercialization and industrialization of high-tech achievements as soon as possible, so as to obtain high capital gains.
The abbreviation of PE private equity, commonly known as private equity investment fund. Different from private equity investment funds, PE mainly refers to investment funds that raise funds and invest in shares of unlisted companies, and a few PEs invest in shares of listed companies.
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Characteristics of venture capital:
1. 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.
3. 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.
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