Most of the funds of venture capital companies are used to invest in start-ups or unlisted enterprises (although the current laws and regulations have greatly relaxed the use of funds). They do not aim at operating the invested company, but only provide funds and professional knowledge and experience to help the invested company obtain greater profits, so they are high-risk and high-return enterprises that pursue long-term profits.
Second, PE: refers to the price-earnings ratio. P/E ratio is one of the most commonly used indicators to evaluate whether the stock price level is reasonable. Divide the stock price by the annual earnings per share (the market value of a company divided by the annual profits attributable to shareholders can also get the same result).
When calculating, the stock price usually takes the latest closing price, and if EPS is calculated according to the published EPS of the previous year, it is called historical price-earnings ratio; Generally speaking, the EPS forecast value used to calculate the estimated P/E ratio adopts the market average forecast, that is, the organization that tracks the company's performance collects the average or median of the forecasts obtained by many analysts. What is a reasonable price-earnings ratio, there is no certain standard.
3.IPO refers to the initial public offering. Initial public offering (IPO) refers to the first time that an enterprise or company sells its shares to the public (IPO refers to the way that a joint-stock company makes an initial public offering to the public).
Usually, the shares of listed companies are sold through brokers or market makers according to the agreed terms in the prospectus or registration statement issued by the corresponding CSRC. Generally speaking, once the initial public listing is completed, the company can apply for listing on the stock exchange or quotation system. A limited liability company should be changed into a joint stock limited company before applying for IPO.
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The characteristics of VC (venture capital):
Venture capital is called venture capital because there are many uncertainties in venture capital, which bring great risks to investment and its return. Generally speaking, venture capital is invested in high-tech start-ups. The founders of these enterprises have excellent technical expertise, but lack company management experience.
Another point is whether a new technology can be transformed into an actual product and accepted by the market in a short time, which is also uncertain. There are other uncertainties that lead people to think that this kind of investment is risky, but it is undeniable that venture capital has a high rate of return.
Perhaps the most familiar but least known investment risk is market risk. In a highly liquid market, for example, in stock exchanges around the world, the price of stocks depends on the relationship between supply and demand. Suppose that if the demand for a specific stock or bond rises, the price will rise accordingly, because every buyer is willing to pay more for the stock.
Venture capitalists are both investors and operators. Venture capitalists generally have a strong technical background and professional management knowledge. This kind of knowledge background helps them to understand the business model of high-tech enterprises and help entrepreneurs improve the operation and management of enterprises.
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