The risks of investment decision-making are mainly reflected in inaccurate project positioning and omissions in decision-making procedures.
Each project has a specific industry, and investors do not understand the industry, industry cycle and market environment where the project is located, which will cause industry positioning risks. Incomplete understanding of the technical level and production capacity of the project enterprise and inaccurate positioning of the development stage of the invested enterprise will lead to the risk of investment type selection. Take the investment in the real estate industry as an example. When the economy turns from a trough to an inflection point of recovery, enterprises such as construction and cement will take the lead in benefiting, and the stock price rise will start ahead of schedule. However, real estate is a cyclical industry. Once the market demand is close to saturation, the development pressure of the real estate industry will double. At this time, investors should consider turning.
In addition, before making investment decisions, we have to go through a series of procedures, such as investment letter of intent, due diligence, financial and legal audit, etc. Imperfect investment procedures, incomplete due diligence, and program omissions may cause unpredictable risks.
Second, operational risks.
Enterprise management risk mainly refers to the management risk of the invested enterprise. The risk may be caused by changes in the market environment of the industry where the project is located, such as economic recession. It may be a mistake in business decisions, such as blind expansion and excessive diversification. It may also be that the ability of enterprise managers is insufficient or the management team is unstable. Changes in business conditions can easily lead to adverse situations such as performance decline, shutdown and bankruptcy. , thus affecting the withdrawal of equity investment funds through listing, equity transfer and management repurchase. , resulting in no return on equity investment or even loss of principal. In the worst case, it may even lead to a complete loss of principal.
Cai Dabiao, the former chairman, rashly implemented the "family-oriented" internal management reform, which triggered internal contradictions and led to the withdrawal of almost all venture capital funds. In the end, Cai Dabiao was sentenced to 14 for embezzlement and misappropriation of funds, and nearly 50% of the shares were auctioned by the judicial authorities.
Third, the capital market risk.
Sudden changes in specific policies and regulations of certain industries and certain investment methods, that is, changes in the capital market, may increase the unexpected risks of investors. The capital market risk here mainly refers to the risks brought by policies (such as monetary policy, fiscal policy, industrial policy, regional development policy, etc.). When the policy changes, the market price fluctuates and the risks appear immediately. This kind of risk is a systematic risk that any investment project can't avoid, because the changes of macro policies such as interest rate adjustment have an impact on every enterprise in the system, but different industries are affected to different degrees.
In addition, equity investment is prone to market manipulation or insider trading, which undermines the principle of openness, fairness and justice in the capital market, thus causing losses to some investors. At present, it is still very difficult for public security organs to supervise these behaviors. On April 29th, Xu Xiang, a private equity tycoon known as "investment genius", was arrested on suspicion of insider trading and market manipulation. It is reported that his sentence may be 20 years. It can be said that insider trading and market manipulation are the biggest illegal acts in the securities market at present.
Fourth, legal risks.
Legal risks are mainly reflected in legal issues such as contracts and intellectual property rights. Management contracts or other similar investment agreements signed between equity investment funds and investors, such as security of deposit and guaranteed rate of return, are often not protected by law, which is one of the investment risks. Improper conclusion of equity fund investment agreement and protection of trade secrets may also bring contract legal risks.
Intellectual property law is of special significance to scientific and technological enterprises. If the core of the selected project is technology, we should pay attention to whether there is legal risk in the intellectual property rights of the core technology. If the intellectual property rights such as trademarks and patents owned or used by the target enterprise are abnormal, it will affect the entry of capital and even bear the responsibility for breach of contract or contracting negligence. For a startup company, the labor relationship between the entrepreneur and the original unit, the confidentiality of the original unit's proprietary technology and business secrets, and the agreement to abide by the prohibition of horizontal competition may all lead to intellectual property disputes.
In addition, legal risks are also manifested in the daily operation of the target enterprise, such as contract risks, irregular business risks, accidental injury risks of employees, imperfect rules and regulations, and lax management of company seals.
Verb (abbreviation of verb) implementation risk
The main influencing factor of execution risk is time. For equity investment, the investment cycle is generally long, and the withdrawal period of equity is generally three years, or five to seven years or even longer. However, not all equity investments can be listed and cashed out within the agreed time and have a good ending. More investment projects may not be listed or can only be transferred within the original shareholders for various reasons. Therefore, the imperfect exit mechanism will increase the risk of equity investment funds because there are many uncertain factors.
The execution risk is also reflected in the operation of the investment process. The investment process is complex, involving industrial and commercial registration, taxation, foreign exchange management, approval by ministries and commissions, and IPO preparation. The more complicated the implementation process, the longer it takes, which will affect the time cost and return rate of investment.