What does equity investment mean?

Equity investment is the act of investing in and purchasing the equity of a company in order to participate in or control its business activities. It can occur in the publicly traded market, when a company is initiated or established, and when shares are transferred privately.

Equity investment is divided into the following four types:

1, the right of control refers to the right to decide the financial and business policies of an enterprise and gain benefits from its business activities.

2, * * * * has control, refers to the control of an economic activity according to the contract.

3, significant influence, refers to the enterprise's financial and business policies have the power to participate in decision-making, but do not decide these policies.

4, no control, no * * * control and no significant impact.

Extended data:

Precautions:

1, the correct investment attitude. Equity investment, like other people's partnership business, pursues the safety of principal and a sustained and stable return on investment. No matter whether the invested company can be listed in the securities market, it is an ideal investment object as long as it can bring considerable investment return to investors.

2. Know the company you invest in. In order to invest successfully, investors must have a certain degree of understanding of their investment targets. For example, the management ability and quality of company managers, whether they can think for shareholders, the company's assets, profitability, competitive advantage and other information. Because most investors have limited information collection ability, it is best for investors to invest in local high-quality enterprises.

3. Know how to control the investment cost. Even for high-quality companies, if the price of purchasing equity is too high, it will still lead to a long payback period and a decline in return on investment, which is not a good investment. Therefore, when making equity investment, we must calculate the time to recover the investment cost according to the normal profit level of the company.

In equity investment, judging the market and competitiveness of investment projects is also one of the key points of equity investment. The market direction is more important than the model, because the model itself needs to be constantly adjusted and optimized in the process of starting a business. The logic for equity investors to choose equity investment projects is to see that a certain field will undergo great changes in the next five to 10 years, and then choose a reliable entrepreneurial team in this field to participate in this future opportunity in the form of funds.

In other words, equity investors' money is not used for trial and error, and the overall logic of the model is more willing to be controlled in their own hands, and the adjustment of model details is usually more open. Because the first company in each field will get higher multiple returns if it can go public, institutional investors are more willing to invest in the first company with high valuation than in the startup company with low valuation.

References:

Baidu Baike stock right investment