Wealth Workshop shares the differences between angel investment, venture capital (VC) and PE

If you are satisfied with the simple answer of "different stages", then you may have missed an opportunity to think about the relationship between capital and enterprise development. First of all, I have to explain that in the public context, all three can be considered as venture capital, which is what people often call venture capital. In China, it is also officially called venture capital. Strictly speaking, it refers to assets that are not publicly traded on the stock exchange, so it covers/has a broader scope. To put it simply, the three are divided according to the stage of the invested project, which is the seed stage, the early/growth stage, and the mature stage. Nevertheless, the difference between the three is not only reflected in the sequence of time. Investments at different stages are often made by different investors, and the amount of investment, source and investor focus are different. So, why do projects at different stages require different investments? This is mainly determined by the characteristics of the project at different stages. Projects in the seed stage often only have one and an initial team (some only have one or two founders). Whether it can be converted into a B is highly uncertain. It requires a period of trial and error to test the various assumptions behind it. Verify and explore the truly feasible direction. During this process, the direction and content of the project may face adjustments at any time, and the project has no history and lacks continuity. The stable factor that can be referenced by investors is the team (and mainly the founders), so the seed stage Investment mainly depends on people. People are extremely complex. If you want to make a judgment about a person, you must understand him deeply and deal with him. Since this process relies on a lot of experience and intuition and is difficult to conduct rational analysis, it is generally individual investors who perform this task and make this decision. This is also the origin of the title "Angel". In addition, since the amount of funds required for experimentation and exploration is generally not too large and individual investors can afford it, and the earlier the project, the greater the risk, the amount of angel investment is generally smaller, generally less than 10,000 (RMB). There seems to be no generally accepted definition of the growth stage. My personal understanding is that when a project has gone through the seed stage and explored a more feasible path, it enters the growth stage. It can be said that the seed stage is just talk on paper, while the growth stage is based on practice and hope can be seen from the market's response. After the enterprise enters the growth stage, the strategy has basically taken shape, and it is ready to invest resources (of which capital is the key resource) to realize this strategy. Anything invested at this time can be counted as yes. Therefore, it is an investment used to support the company to implement the strategy after the corporate strategy is initially formed. At this time, the company has just made some achievements in the market, or has seen some signs of success, but the company's own resources are not enough to support it, and it needs to introduce external resources. For investors, the key assumptions implicit in the corporate strategy have been verified by the market. At this time, the project can be rationally analyzed and the risks faced can be relatively accurately assessed. This provides the basis for institutional investment, that is, the actual investor can entrust professional investors to operate and supervise the investors, thereby creating a principal-agent relationship in the investment field. On the other hand, at this stage, companies need The amount of funds is relatively large, and it would be difficult to diversify risks if invested by individual investors, so institutionalization of investment has become inevitable. Therefore, institutional operations are generally carried out in the form of funds, and the investment amount is generally in the order of tens of millions. Usually it refers to the funds invested in mature projects. At this time, the enterprise has achieved a certain degree of success in the market. Through stable operations, the enterprise has been able to sustainably obtain economic resources from the market and has achieved a certain market position. It no longer faces survival problems in the short term. At this time, corporate financing needs are relatively diversified. Some are to standardize listings, some are to implement mergers and acquisitions for industrial integration, and some may be to extend business lines, and so on. But they all have a common feature, that is, the purpose of corporate financing is to reach a higher level. For investors, the company itself already has more economic resources at this time. Although the amount of investment is generally large (if the amount is small, the company can rely on its own accumulation or bank loans), through gambling, repurchase and other contract terms The risk of investment can be locked within a certain range, so the risk is more controllable. Investors expect to achieve higher returns in a shorter period of time, and the goal is to move in and out quickly. On the other hand, at this time, the company is not "short of money" in a sense. Financing is often focused on long-term strategies or industrial resource integration, so investors are required not only to contribute money, but also to have certain industrial background or other resources. , to assist enterprises to successfully achieve their goals. If angels are fighting for vision and judgment, then what they are fighting for is resources. Through long-term research and practice, Wealth Works has summarized and developed equity finance courses with practical significance, providing companies with equity layout, equity valuation, equity incentives, angels, investment banks, risk control training, wealth management, equity investment, and entrepreneurship. Full-chain financial training integrating coaching. Effectively solve the problems related to equity and finance of enterprises and help enterprises develop and take off. Lecturer's profile - Yue Xinfeng, "Evangelist of China's Equity Finance" Yue Fei, Zhongwu Wang Shisun of the Southern Song Dynasty, China's Equity Finance Evangelist, Founder of Wealth Factory, Chairman of Fuhe Capital, Outstanding Alumni of International Finance of Shandong University, Australian Overseas Study Background, Senior Manager of Many World's Strongest Financial Institutions