Venture Capital Enters Four Stages Of Enterprise

The industrialization of a new high technology is usually divided into four stages: technology brewing and invention stage, technological innovation stage, technology diffusion stage and industrialization stage.

The completion of each stage and the pition to the next stage require the cooperation of funds, and the nature and scale of funds required at each stage are different.

The investment of venture capital: seed period (seed stage) (Seed Stage) seed stage is the brewing and invention stage of technology. This period has very little capital requirements. From creative incubation to laboratory samples to rough samples, it is usually solved by scientists and engineers themselves. Many inventions are "brainstorm" when engineers and inventors are doing other experiments, but this "brainwave" can not be changed into samples in the original investment channels, and further forms products, so inventors will find new investment channels.

The venture capital in this period is called Seed Capital. Its main sources are personal savings, family property, friends borrowing and applying for Natural Science Fund. If not enough, it will find specialized venture capitalists and venture capital institutions.

It is far from enough to get a venture capitalist's investment.

It is best to have one sample.

However, it is not enough to explain how advanced, reliable and creative the technology of this product is. It is not enough to conduct a detailed investigation of the market sales and profit situation of the product, scientifically predict and make it into a venture capitalist.

The success instinct of a new enterprise must be understood only by clever engineers and wise inventors. It has a good understanding of marketing and corporate finance.

After investigation, venture capitalists agree to invest, and they will build a small joint stock company.

Venture capitalists and inventors share certain shares and cooperate in production until they form formal products.

Such enterprises face three major risks, one is the technical risk of high and new technology, the two is the market risk of high-tech products, and the three is the management risk of high-tech enterprises.

The proportion of venture capitalists investing in seed investment in their total venture capital is very small, generally not more than 10%, but it bears great risks.

These risks are many uncertain factors and difficult to assess. Two, the harvest time is long, so it requires higher returns.

Two, venture capital investment: the introduction stage (Start-up Stage).

At this stage, enterprise planning and market analysis are completed, product prototypes are further solved in the test, technical problems are eliminated, enterprise risk management organizations are formed, products are entered into the market for trial sale, and market opinions are heard, but the trial sale of products is still not profitable, and product prototypes are conceived.

This stage of capital is called venture capital, and the capital investment needs to increase significantly.

At this stage, although the product prototype and business plan have been completed, the product is still not listed in bulk, and the management mechanism is not yet perfect.

Therefore, Vc firm mainly investigates the feasibility of venture enterprise's business plan, as well as product function and market competitiveness.

If Vc firm feels that the investment target has a considerable survival rate, and it can also increase effective help in business management and market development, it will invest.

The risks of this stage are mainly technical risk, market risk and management risk.

Three, venture capital investment: Expansion Stage growth period refers to the expansion stage of technology development and production.

This stage of capital demand has increased relative to the first two stages. On the one hand, it is to expand production, on the other hand, it is to expand the market and increase investment in marketing, and finally, enterprises reach the basic scale.

This stage of capital is called Expansion Capital, which is mainly derived from the increase of original venture capitalists and the entry of new venture capital.

In addition, product sales can also return considerable funds, and banks and other stable funds will also choose to enter.

This is also the main stage of venture capital. The risk of this stage is not mainly technical risk, because the technical risk should be basically solved in the first two stages, but the market risk and management risk will be increased.

As technology matures, competitors begin to emulate and take away part of the market.

Most of the business leaders are from the technical background and are not familiar with marketing, so they are easy to choose between advanced technology and market needs.

The expansion of enterprise scale will challenge the original organization structure.

How to maintain both the advanced technology and the market results is the source of market risk and management risk.

To this end, venture capital institutions should actively assess risks and send members to the board of directors, take part in decisions on major events, provide management consultation, select and replace managers, and eliminate these risks and disperse risks.

The risk of this stage has been greatly reduced compared with the first two stages, but the profit margin is also decreasing. Venture capitalists should also start to quit when helping to increase their value.

Four, venture capital investment: mature period (Mature Stage) mature period is the mature technology and products into the stage of large industrial production, this stage of the fund is called mature Mature (Mature Capital).

This stage needs a lot of capital, but venture capital has rarely invested more.

On the one hand, the sales of enterprise products can generate considerable cash inflow. On the other hand, because of the mature technology and stable market, enterprises have enough credit power to attract bank loans, issue bonds or issue stocks.

More importantly, with the sharp reduction of risks, profit margins are no longer attractive. They are no longer attractive to venture capital.

Maturity is the harvest season of venture capital and the exit stage of venture capital.

Venture capitalists can return huge profits to investors.

Venture capital exit at this stage, not only because this stage is no longer attractive to venture capital, but also because this stage is attractive to other investors, such as banks and general shareholders, venture capital can quit at a better price and hand over batons to other investors.

There are many ways for venture capital to exit.

But we must quit, and we must not hesitate.

In view of this, there are four stages of venture capital investment: small investment in seed stage, large investment in introduction period, large investment in growth period and part of investment in maturity stage.

They correspond to the four processes of product growth.

In fact, there are no obvious boundaries between the four stages.

The four process of enterprise growth is the product life cycle theory. The more commonly used method of distinguishing four processes is based on the change of sales growth rate.