What is PE? What is VC?

Venture capital (VC), private equity investment (PE), some people may not be very clear about their concepts and differences. Next, I will explain them in detail. First of all, let's take a look at the concepts of VC and PE.
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Venture capital (VC)

There are no high risks involved in the five phases of Venture Capital: seed, initial, growth, expansion, and maturity, specific performances include project screening, due diligence, post-monitoring, intellectual property rights, selection technology, public policy, highly asymmetric information, moral quality, management team, business partner, financial supervision, environment, taxation, politics, and communication platforms. In Western countries, According to incomplete statistics, venture capitalists (venture capitalists) invest 10 projects, only 3 are successful, and 7 are failed. It is in this way that the risk investment community will pursue the principle of "Don't put eggs in one basket" of diversified portfolio investment. World Financial Network

Venture capital does not aim to be a controlling company. Whether it is successful or not, exit is an inevitable choice for venture capital. The withdrawal methods that reference venture capital include IPO, acquisition, and liquidation. At present, venture capital companies in China are mainly seeking to withdraw from their IPOs: they are listed overseas in the form of offshore companies; domestic joint-stock companies are listed overseas in the form of issuing H shares outside China; domestic companies are indirectly listed on the foreign shell, domestic companies are listed on the foreign shell, domestic joint-stock companies are listed on the domestic main board, and domestic companies are indirectly listed on the domestic A shares; another indirect way to go public is to go public with a shares of Chinese companies. 21jrr.com

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Private equity investment (PE)

In China, it is often referred to as private equity investment. It refers to the equity investment made to private enterprises (non-listed enterprises) in the form of private equity, with the future withdrawal mechanism taken into account in the transaction implementation process, that is, through listing, mergers and acquisitions, or management repurchase, the sale of shares to make profits. 21jrr.com

According to the investment stage, private equity investment in the broad sense can be divided into venture capital, development capital, M & A fund, sandwich capital, capital revitalization, pre-IPO capital, and other such as private equity investment after listing, distressed debt, and real estate investment. World Financial Network

Domestic active PE investment institutions can be summarized into the following categories:

First, dedicated independent investment funds, such as the Carlyle Group, 3 ipuorgetc;

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Second, the direct investment department of large and diversified financial institutions, such as Morgan Stanley Asia, JP Morgan partners, Goldman Sachs Asia, Citic Capital etc;

3. New private equity investment funds, such as Hongyi investment and shenbin investment, were established after the regulations of Sino-foreign joint venture Industrial Investment Funds were introduced; 21jrr.com

4. Investment Funds of large enterprises serve the Group's development strategies and investment portfolios, such as GE Capital;

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5. Others such as Temasek and GIC.

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Difference between PE and VC

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Both PE and VC are investments in pre-market enterprises, which are very different in terms of investment stage, investment scale, investment philosophy and investment characteristics.

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Many traditional VC organizations are also involved in the PE business, while many organizations traditionally considered to be dedicated to the PE business are also involved in the VC project. That is to say, PE and VC are just a conceptual distinction, in actual business, the boundaries between the two are becoming increasingly vague.

In addition, PE funds are essentially different from private equity funds in the Mainland. PE funds are mainly invested in the equity of unlisted companies in the form of private equity, while private equity funds mainly refer to raising funds to investors in the form of private equity, funds managed and invested in the securities market (mostly secondary markets.