VENTURE CAPITAL

Sino Strategy Investments Limited (SSI) acts as a Venture Capital Investment Fund. Among the various financing options entrepreneurs can turn to when starting a new company is venture capital. Venture capital (VC) is investment money that is given to help build new start-up firms that often are considered to have both high-growth and high-risk potential. VC is willing to take the risk to invest into these early stage companies with the hope that a substantial return (normally up to 400% to 500% gain) will be rewarded to the VC few years down the road upon execution of the “Exit Strategy”.
Entrepreneurs often turn to venture capitalists for money because their company is so new, unproven and risky that more traditional forms of financing, such as through banks, aren’t readily available. Unlike other forms of financing where entrepreneurs are only required to pay back the loan amount plus interest, venture capital investments commonly come in exchange for equity ownership shares in the company to ensure they have a say in its future direction.

Venture capital funds come from venture capital firms, which comprise professional investors who understand the intricacies of financing and building newly formed companies. The money that venture capital firms invest comes from a variety of sources, including private and public pension funds and/or government funds, endowment funds, foundations, corporations and wealthy individuals, both domestic and foreign. Those who invest money in venture capital funds are considered limited partners, while the venture capitalists are the general partners charged with managing the fund and working with the individual companies. The general partners take a very active role in working with the company’s founders and executives to ensure the company is growing in a profitable way.

In exchange for their funding, venture capitalists such as SSI expect a high return on their investment as well as equity shares of the company. This means the relationship between the two parties can be lengthy. Instead of working to pay back the loan immediately, the venture capitalists work with the company five to ten years before any money is repaid. At the end of the investment, venture capitalists will sell their shares of the company back to the owners, or through an initial public offering (IPO), for what they hope is significantly more than they initially put in.