Venture Capital Difference Between Institutional Investor and Strategic Investor 10

Venture capital means "taking risks in order to get the desired return on your investment". Venture capital is defined as "a professional investment** that takes risks, invests capital in a promising company or project, and increases the added value of its invested capital".

Venture capital is an integral part of investment, and similar to commercial banks in that venture capitalists also act as intermediaries and conduits between investors (such as lenders) and entrepreneurs (or borrowers), just like bankers. But it's very different from commercial bank lending: bankers always avoid risk, while venture capitalists try to navigate it.

Banks always ask the borrower for property collateral before taking out a loan; Venture capitalists, on the other hand, invest capital once they see a promising company or project, and they will also help the company they invest in to operate. Therefore, for those small companies, especially those who are in the initial stage, to receive venture capital, investors bring them not only money, but also more important resources such as strategic decision-making, technology evaluation, market analysis, risk and management assessment, and help to recruit management talents.

Traditional venture capital targets are mainly small enterprises that are in the start-up stage or early stage of development but grow rapidly, and mainly focus on those high-tech industries with development potential. Venture capital is usually carried out in the form of partial participation, which has a strong "risk-taking" characteristic, and the return as a high investment risk is the opportunity to obtain medium and long-term high returns.

Angel investing is a type of venture capital. Venture capital invests more in management while investing money. Venture capital generally has a large amount of investment, and it is gradually invested with the development of venture enterprises.

Venture capital scrutinizes venture companies strictly. The amount of funds invested by angel investment is generally small, and it is invested once and does not participate in management. The scrutiny of venture companies is less stringent and more based on the judgment or even preference of the investor's supervisor.

Venture capital is a large amount of money and is often the capital of several institutions, while angel investment is often paid by one person and received when it is good. Venture capital is a formalized, professional, and systematic business behavior, while angel investment is an individual or small business behavior.

Their main differences are:

1 Angel investors have a limited amount of investment, so they focus on startups at the initial seed stage.

2.A venture capitalist is a professional investor, and his investment needs to have a certain return on investment to make the ** increase in value quickly; And the angel investor is also an entrepreneur himself, and he is likely to be the founder of another successful startup. Not only will he be able to bring you capital, but he will also provide experience in starting and growing a company.

What is the difference between venture capital and angel investment?

Venture capital is generally directly invested in cash, with a relatively large proportion of shares, and the investment is mainly to make money; The strategic investment is more difficult to explain, mainly because you fancy the prospect of the project, but you don't invest money, just invest some resources, and then take a few points of shares in the company, if the company grows into Ali or something, it is a great success of strategic investment.

Venture Capital Considerations:

Venture capital refers to a type of capital provided by professional investors for fast-growing emerging companies with great potential for appreciation. Venture capital enters a business by purchasing equity, providing loans, or both;

Each project has a specific industry, and the lack of understanding of the industry, industry cycle, and market environment in which the project is located will cause industry positioning risks.

Before making an investment decision, it is necessary to go through a series of procedures, such as investment letter of intent, due diligence, financial and legal audit, etc., and the investment process is not perfect, and the omission of the procedure may cause unpredictable risks;

The business risk of the enterprise mainly refers to the business operation risk of the invested enterprise. The risk may be due to a change in the market environment of the industry in which the project is located;

Sudden changes in specific policies and regulations for certain industries, investment methods, etc., are likely to increase unexpected risks for investors.

A: Corporate investors and institutional investors are two different types of investors, and the main differences between them are as follows:

1.Investment scope: Corporate investors mainly focus on internal assets and project capital expenditures, while institutional investors obtain income through market investment products such as **** and **.

2.Investment scale: Corporate investors are generally small in scale, mainly for their own business development or asset management; Institutional investors, on the other hand, are more professional and experienced because they are relatively larger, subject to more complex market risks and regulatory regimes.

3.Investment Objectives: Corporate investors mainly pursue their own interests and profit growth; Institutional investors, on the other hand, mainly invest on behalf of others or institutions, and make investors earn income by managing common **, insurance assets, etc.

4.Decision-making process: The general decision-making process of corporate investors is relatively fast and direct, and only requires their own decision-making and approval at the operational level; Institutional investors, on the other hand, need to consider a number of factors, such as a long-term focus on value creation.

For example, if a startup company needs a large amount of money to develop its business, it can choose to promote the sale of internal assets or cooperate through corporate contracts to obtain sufficient financial support. And if company A wants to attract more external investment, it can look for institutional investors to raise funds, such as partnering with venture capital firms or offering in the public market**. In this process, corporate investors focus more on their own profitability and business development, and may ignore some market and risk factors; Institutional investors, on the other hand, pay more attention to long-term income growth and risk control, and have a professional management team and investment decision-making process, which can conduct a more comprehensive and scientific evaluation and management of investments.

Another example, for example, if entrepreneur B has some idle capital, he can choose to invest by developing new products, expanding existing businesses, or acquiring other businesses, which falls under the category of corporate investors; If a pension institution C wants to obtain a stable return, it can choose to buy blue chip stocks, debt collapse bridge smart bonds and other group investment products in the ** market to achieve asset appreciation, which is a typical investment for institutional investors. It should be noted that both corporate and institutional investors need to comprehensively consider market risk, return on investment, asset management and other factors to formulate sustainable investment strategies, and continuously adjust and optimize them in practice.

1. Private equity: Private equity investment (also known as private equity investment or private equity**, private fund) is a very broad concept used to refer to the investment in any kind of equity assets that cannot be freely traded in the ** market. Passive institutional investors may invest in private equity**, which is then managed by a private equity firm and invested in the target company.

Private equity investments can be divided into the following categories: leveraged buyouts, venture capital, growth capital, angel investment, and mezzanine financing, among others. Private equity investment** generally controls the management of the investee company and often brings in a new management team to increase the value of the company.

Just like the current dispute between Baoneng and Vanke, Cui Jun and Xinhua Department Store.

2. Venture capital: VC is a conventional concept with a specific connotation in China, and it is more appropriate to translate it as venture capital. Venture capital in a broad sense refers to all investments with high risk and high potential returns; Venture capital in the narrow sense refers to the investment in the production and operation of technology-intensive products based on high and new technologies.

According to the definition of the National Association of Certified Venture Capitalists, venture capital is a kind of equity capital invested by professional financiers in emerging, rapidly growing enterprises with great competitive potential.

3. The difference between the two: The private equity industry originated from venture capital, and in the early stage of development, it was mainly based on the entrepreneurship and expansion financing of small and medium-sized enterprises, so venture capital has become synonymous with private equity investment for a long time. Since the 1980s, the popularity of large-scale mergers and acquisitions** has given private equity a new meaning, and the main difference between the two is in the field of investment.

The investment scope of venture capital ** is limited to the start-up and expansion financing of small and medium-sized companies based on high and new technology, and the investment objects of private equity ** are mainly those mature enterprises that have formed a certain scale and generate stable cash flow, such as Cui Jun's private equity is to invest in listed companies and become shareholders control the board of directors. This is the biggest difference from venture capital**.

Difference 1: Investment institutions are different.

Strategic investors are generally companies in the industry or close to the investee.

Venture capital is a relatively simple capital operation institution, although there are experts within it who may have a deep understanding of the industry, but the company as a whole is not in this industry or similar industries.

Difference 2: Value-added services.

At the beginning of investment, strategic investors generally promise to give great help to the investee in terms of capital, technology, management, market, and talent based on their own advantages. Of course, in practice, some strategic investors will sincerely help the investee, while some strategic investors are purely to fool the investee.

The value-added services that venture capital can provide to the investee are mainly after the investee's business has developed, and the enterprise or company needs to provide better help to the investee in terms of capital operation through IPO listing.

Difference 3: Investors are cautious about their position in their own institutions.

The executor of the strategic investor is generally not the dominant department within the strategic investor's company, and we see that many enterprises that have developed, especially those with a certain balance of funds, have set up their own investment departments to make some investments abroad, and the more typical ones in China are Alibaba and Tencent. However, relatively speaking, these companies and goods companies have their own main business, and if the investee's business can have a good connection or synergy with the main business of the strategic investor, the strategic investor will pay more attention, otherwise it may become a marginal and dispensable investment result.

Because venture capital institutions only do venture capital business, their investment counterparts have a certain degree of autonomy in the company, and even if they do not have autonomy, they can quickly report investment-related information internally and get feedback quickly, and venture capital institutions are more concerned about all aspects of the investee's information and can make adjustments more quickly.

It has been introduced, strategic investment cooperation is different from general investment cooperation, strategic investment has a long-term plan, and the effect may not be good in the short term, but with the passage of time and the market, the benefits of investment will be greater and greater, so strategic investment cooperation is more favored by some investment companies or investments, and friends in need can choose strategic investment cooperation.

According to the definition of the 2003 Provisions of the Supreme People's Court on the Trial of Civil Compensation Cases Arising from False Statements in the ** Market, an investor refers to a natural person, legal person or other organization engaged in ** subscription and trading in the ** market.

Institutional investor is a concept opposite to individual investor, that is, classified according to the nature of the investor, when the holder is a natural person, the investor is called an individual investor, and when the holder is an institution, the investor is called an institutional investor. At present, institutional investors in the domestic market mainly include:

Companies, insurance companies, investments, social insurance, Qualified Foreign Institutional Investors (QFIIs), and other general legal entities. Institutional investors have relatively standardized investment behavior, strong financial strength, can carry out portfolio investment, diversify risks, and implement professional management.

Strategic investors refer to large enterprises and large groups at home and abroad that have advantages in capital, technology, management, market and talents, can promote the upgrading of industrial structure, enhance the core competitiveness and innovation ability of enterprises, expand the market share of enterprise products, devote themselves to long-term investment cooperation, and seek long-term returns and sustainable development of enterprises. Strategic investors should have good qualifications, relatively strong funds, core technology, advanced management, etc., and have a good industrial foundation and strong investment and financing capabilities.

According to the "Notice on Further Improving the Issuance Method" (certificate issuance.

1999] No. 94), a strategic investor refers to a legal person that has a close business relationship with the issuer and intends to hold the issuer's ** for a long time. After the introduction of the inquiry system, the Notice on Further Improving the Issuance Method was repealed, but there is no definition of strategic investor in other regulations of the China Securities Regulatory Commission.

According to the requirements of the China Banking Regulatory Commission, strategic investors should meet five criteria, namely: the proportion of shares invested in the investment is not less than.

5. The equity holding period is more than three years, the directors are stationed, the shareholding is not more than two Chinese-funded homogeneous banks, and the technical and network support is provided to the Chinese bank.

From the definition of strategic investors by foreign venture capital institutions, it is generally considered that strategic investors are:

A corporate or individual investor who is able to increase the value of an investment through a business or personal relationship that helps the company raise capital and provides marketing and sales support.

Judging from the above definitions of institutional investors and strategic investors, the biggest difference between the two is the relationship with the issuer. The strategic investor holds the issuer** for a long time and signs relevant agreements with the issuer, promising to provide it with certain business support; Institutional investors, on the other hand, are general in nature and have no direct connection with the issuer and no clear long-term holding arrangement. Domestic strategic investors generally refer to corporate investors, and there are no individual investors, while foreign countries do not have such restrictions on this.