The Difference Between Venture Capital And Venture Capital

Venture capital and general investment

1) high risk. Venture capital investors are mainly small and medium-sized high-tech enterprises that have just started or have not yet started. The enterprises are small in scale and have no fixed assets or funds as collateral or guarantee.

Because investment targets are often "seed" technology or a kind of creative idea, they are in the initial stage of design, and have not yet been tested by the market, and whether they can be turned into real productive forces, there are many uncertain factors.

Therefore, high risk is the essential characteristic of venture capital.

2) high profitability. Venture capital is a forward-looking investment strategy. It is expected that the high growth and high value-added of enterprises are the intrinsic motivation of their investment.

Once the investment is successful, it will bring ten times or even a hundred times the return on investment.

High risk and high return are fully reflected in the process of venture capital.

3) low liquidity. Venture capital is invested in the early stage of high and new technology enterprise. When the enterprise develops mature, it can realize the stock right through capital market and get a return, and then carry out a new round of investment operation.

Therefore, the investment period is longer, usually 4~8 years.

In addition, when venture capital finally exits, if the export is not smooth, divestment will be very difficult, resulting in a lower liquidity of venture capital.

In essence, venture capital is a support system for high and new technology industry in the process of capital input and effective use. It accelerates the pformation of high and new technology achievements, expands the high-tech industry, and catalyzes the vigorous development of knowledge economy, which is the most important role of it.

Of course, for the whole country's economy, venture capital is of great significance in promoting technological innovation, promoting the adjustment of industrial institutions, changing the employment structure of the society, expanding the choice channels for personal investment, and strengthening the depth of capital market.