Financing

Financing is quite simple to say. Some people in society are short of money, and some are very rich. Now we can build a bridge and give more money to those with less money. Both parties can benefit, and the bridge is finance. One end of the bridge is investment, and the other end is financing. But financing is actually very complicated, because it involves real money, and people are at odds with each other, so the trust issue is very difficult, so it is worth talking about. Once we understand financing, we basically understand finance, and it can also help us better understand investment.

Financing can be divided into direct financing and indirect financing. For example: Xiao Ming developed an app and planned to start a business. His uncle was very optimistic and invested 1 million. This is called angel investment; after two years, Xiaoming's company's user base was growing rapidly but its profits were still unstable. So-and-so Capital was very optimistic and invested 100 million, which is called venture capital. Five years later, Xiaoming's company's profits grew steadily and successfully achieved IPO. The entire process, whether it is angel investment, venture capital or IPO, is direct financing for Xiaoming Company.

Xiaohei's factory business is booming, and he plans to invest another 20 million yuan to expand a production line, so he uses the factory machinery as collateral and borrows 20 million yuan from a bank. Borrowing money from the bank is indirect financing.

What is the difference between direct financing and indirect financing? As the name suggests, indirect financing consists in the existence of an intermediary such as a bank. While the bank pools the money of tens of thousands of depositors, it also lends the money to thousands of people who need money, such as gangsters. These two groups of people do not There will be no direct contact, but separate lending relationships with banks. There is no such middleman in direct financing. Whether it is Xiao Ming's uncle, XX Capital, or stock investors, they all have direct investment relationships with Xiao Ming's company.

If we regard money as a special commodity, then direct financing and indirect financing are the two business models of the money business. The indirect financing business model of banks is to eat the interest rate difference between deposits and loans. Although the interest rate difference is not very large, it is a sure thing. As long as the money released can basically be recovered, then the business scale will increase, and the bank will The profits are still considerable.

All the money above 98% can be recovered by our bank. How can we do this? It depends on a strict system. Anyone who has ever taken out a mortgage will know that the procedures are extremely troublesome. Moreover, the bank also has a "lifelong liability system", which means that if the bank manager does not get back the money he put in, he may have to be responsible for it for the rest of his life.

Precisely because of this, banks inevitably prefer to add icing on the cake, and it is difficult to ask them to provide help in times of need. When the real estate industry is booming, bank managers can chase big real estate developers to provide money, but it is difficult for them to be willing to lend money to private small businesses without mortgage assets. But we cannot say that this is indifference. In the final analysis, it is still determined by the business model of banks.

The business model of direct financing is quite different. For example, venture capital is called casting a wide net. 10 billion funds are invested in an average of 100 projects. If one or two tens of billions projects are launched, the money earned can cover all the losses of other projects, and there is still a lot left. These invested companies are generally relatively small and are basically innovative companies. It is difficult for banks to lend money. Direct financing such as venture capital gives them the opportunity to grow and develop. Finally, to summarize, financing and investment are the two ends of finance; financing is divided into direct financing and indirect financing, which are two business models of money. One is the interest rate difference model of banks, which emphasizes that the money loaned out should be recovered as much as possible. , small profits but quick turnover, suitable for large enterprises; one is venture capital, which casts a wide net model, the key is to be able to make a bet, and is suitable for small businesses.

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