Four Misunderstandings In Pursuit Of Venture Capital

Many private enterprises have begun to realize the importance of financing through capital operation, and have boldly stepped into various capital markets. In particular, based on many advantages such as unsecured, long investment cycle, and professional investors' involvement in management, many enterprises began to prefer to introduce venture capital. However, many entrepreneurs still have misunderstandings about venture capital, and lack of real understanding of venture capital fund's actual operation, mainly in the following four aspects: "I have enough cash flow and do not need venture capital". Some enterprises with good operating conditions have gradually entered the growth stage, and have obtained stable cash flow. They think they have money and do not need to introduce venture capital.

In fact, with the advent of globalization and the influx of foreign capital, it is difficult for Chinese enterprises to compete with foreign companies in terms of scale.

If they can not grow rapidly, the status of these enterprises is likely to be reshuffled. Especially for small and medium-sized private enterprises, the introduction of venture capital seems to be a good way out of the situation of poor financing channels and high cost of listing and financing.

Moreover, it is a kind of equity investment. The focus of venture capitalists is not on short-term profits, but on long-term owners' rights and interests. This undoubtedly creates more favorable conditions for further expansion and development of enterprises.

Therefore, it is a shortsightedness to negate the role of VC in terms of the good financial situation.

"Why am I not so good?"

Some enterprises have strong strength, have high quality products, smooth channels, efficient marketing, loyal customers, and some have even been living in the leading industry for many years. Unlike the first type of enterprises, these enterprises attach great importance to financing, have contacted many VC agencies, and have some financing experience, but have not succeeded yet.

These companies are complaining that "I am so excellent, why do you not vote?"

At the same time, it does not reflect on its own market prospects, core teams, technical barriers, business models, financing plans and other hard indicators have really reached the requirements of venture capitalists, and have ignored other important factors.

For example, some funds themselves have only 4-5 years' investment period. If they have to wait for 5 years to quit making money, no matter how attractive the business prospect is, investors will not intervene.

Therefore, before the pursuit of wind investment, enterprises should be as much as possible to touch the foundation of the investment fund, so as not to do useless work.

The venture capital institutions only invest in high risk high-tech enterprises. Some private enterprises believe that the so-called venture capital does not involve investing in high and new technology development areas with high risks and high returns. However, it ignores the fact that venture capitalists are also a company, and the ultimate goal is to maximize economic benefits.

In this sense, venture capital institutions are also very afraid of risks.

It is also based on this reason that venture capitalists have broken through the tradition of only investing in high-tech enterprises, and Focus Media and Home Inn, which are of low technological content but with good market prospects, have gained the favor of venture capital.

The famous IDG has recently set up a special fund to invest in the media and cultural industries.

All this shows that traditional industries can still get VC.

The venture capital investment is "crazy investment". Some private enterprises even do not know much about the basic knowledge of venture capital. They blindly pursue investment and ultimately fail.

For example, a new media enterprise and an investment organization specializing in environmental protection industry are hard to negotiate successfully, because venture capital institutions usually have a relatively clear professional field restrictions, and an institution generally only invest in one or several industries, and some private enterprises seem to have not recognized them.

Some enterprises, even business plans, can not make specialties. Some of them can't even distinguish themselves from seeds or growing periods. Even more, even the most superficial reason for "to make investors interested in themselves in 5-10 minutes" is not clear. They just stand on their positions and talk freely without considering the interests of investors. It is really courageous, but this can only be a waste of energy and no chance of success.

In short, before pursuing VC, private enterprises should learn as much knowledge as possible, understand the actual operation of VC, and use their limited energy on the blade so as to increase the possibility of introducing VC.