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

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

Part 2

The venture capital market is a market for cultivating innovative companies, an incubator for innovative companies and a cradle of growth. Venture capital is a catalyst for optimizing the combination of production factors of existing enterprises and turning science and technology into productivity. Venture capital is different from traditional investment methods. It integrates financial services, management services and marketing services. Venture capital institutions provide financing services for companies from incubation, development to growth. Venture capital not only brings development funds for enterprises in the seed period and expansion period, but also brings advanced foreign entrepreneurial ideas and enterprise management models. It helps enterprises to solve various entrepreneurial problems and enables many small and medium-sized enterprises to develop by leaps and bounds.

2. Angel investment

1) The concept of angel investment The legendary angel is a girl or baby with white feather wings, responsible for the messenger, sent by God to bless those who need help. In the entrepreneurial and investment circle, there is an investor called “angel investor” by entrepreneurs, which means that these investors bring hope and help to entrepreneurs in difficulty, and are “angels” to help them tide over the difficulties. This title expresses the reverence and respect of entrepreneurs for these angel investors.

Angels Invest refers to an individual who invests in an entrepreneur who has the expertise or unique concept and lacks its own funds to start a business, and bears the high risks in entrepreneurship and enjoys the high returns after successful entrepreneurial success. Or a one-time upfront investment by an independent investor or an informal venture capital firm for original project ideas or small start-ups. It is a form of venture capital. And "Angels" usually refers to investors who invest in very young companies to help these companies start quickly.

In China, there are no commercial associations or research institutions that give clear definitions to angel investors. We have followed the popular saying in foreign countries: angel investors are 3 "F" - family, friends and friends. Fools.

The two Fs of family and friends are well understood. Entrepreneurs' families and friends have known each other for many years, and they have been very familiar with entrepreneurs before they ask for money, even before he starts a business. Family and friends invest more in his startups, in order to support him and his dreams (www.cyonE.com.cn/), I believe he can do the company well. They will not review the business plan, and will not decide whether to invest if they are profitable after careful study of his company. Their investment is more like emotional investment. So strictly speaking, family and friends can only be regarded as angels of entrepreneurs, they are not considered angel investors.

As for the third F, it is not difficult to understand. Start-ups are very risky. For outside investors who are not affiliated with entrepreneurs, he has no knowledge of the history and background of entrepreneurs. Smart and rational investors will certainly do it before investing money. Some research and due diligence, but no matter how many studies and surveys can not eliminate all investment risks, they also get the title of "fool". But it's not that these people are stupid. In fact, they are often the opposite. They are all eye-catching, thinking ahead, and investing money in companies that others have no vision to see. These people may be experienced in a certain field, or they have a successful entrepreneurial experience, they are the real angel investors.

2) Typical representative of angel investors

Merchants in coastal developed areas such as Zheshang and Sushang.

PE private equity investment

1) PE concept and operation mechanism PE (Private Equity) private equity investment is an equity investment in non-listed enterprises through private placement. In the process of transaction implementation, the future exit mechanism is considered, that is, through listing, merger or management. Repurchase and other means, the sale of holdings profit. In the broad sense, PE invests in enterprises in the seed stage, the initial stage, the development stage, the expansion period, and the maturity period.

Please continue to see the third part.