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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.
1, investment project risk
That is, due to poor management, horizontal competition, economic cycle and other reasons, there are unfavorable situations such as performance decline, shutdown and bankruptcy. , affecting the withdrawal of investment funds through listing, equity transfer and management repurchase. , resulting in no return on investment and even loss of principal.
2. Policy risks
Policy risk refers to the risk brought by market price fluctuation due to changes in national macro policies (such as monetary policy, fiscal policy, industrial policy, regional development policy, etc.). )
3. Risk of fund extension
Private equity investment projects generally have a long preparation period from negotiation to successful shareholding, and the original investment plan will be postponed or postponed at any time for various reasons, which increases the uncertainty of investment and brings the risk of fund delay;
4. Liquidity risk
Not all private equity investments can get a good ending through listing and cashing out. More investment projects may not be listed for various reasons or can only be transferred within the original shareholders, or the equity is difficult to cash out in a short time or can only be transferred at a higher discount, which is not conducive to the flow of funds.
There is also a substantive criterion for judging equity crowdfunding and illegal fund-raising. Illegal fund-raising is usually based on a commitment to repay the principal and interest for a certain period of time, and the promised interest is often much higher than that of banks. Equity crowdfunding is to gather a group of friends with the same interests and values to invest and start a business together.
The equity investment model does not involve illegal fund-raising. Illegal fund-raising is based on the promise to repay the principal and interest for a certain period of time, and the promised interest is much higher than that of the bank, while equity crowdfunding is to gather a group of friends with similar interests and values to invest and start a business together. Do not promise a fixed return, but enjoy shareholder rights and bear shareholder risks.