How do venture capital companies operate?

We have been doing venture capital since 1998. Jo Tango, who is currently working for Kepha Partners Venture Capital Company, has answered the above questions for us. \x0d\ Generally speaking, venture capital companies will get two kinds of returns every time they raise funds: one is to extract a part of the final profit of the investment, usually 20%, which is called "incidental income"; Then there are a series of expenses to maintain the normal operation of the company, because venture capital companies need some financial support before the investment effect appears, and the expenses are usually 2% ~ 2.5% of the total management funds collected every year. \x0d\ What many people (including many investors) don't know is that, in fact, after the venture capital started to operate, these funds were transferred to the accounts of many legal entities, that is, fund management companies. They manage the fund operation and decide many aspects of work, such as the setting and payment of employees' salaries, rent expenses, travel reimbursement, legal counsel and other expenses, as well as the hiring and dismissal process of employees. They have franchise rights. \x0d\ Venture capital companies hand over franchise rights to a few fund management companies. These companies are usually composed of a few people, and their financial situation is confidential, but their decision-making influence is very great, so they are called "chief partners". \x0d\ The existence of other fund management companies is of great significance to the chief partner. Without their permission, venture capital companies can't dismiss the chief partner, so venture capital companies usually choose their own employees as the chief partners, which is convenient for controlling the overall situation. \x0d\ But this power structure affects different types of enterprises: \x0d\ First, it is not easy to raise funds now, unless the investors the enterprise knows have a lot of money (cash or stocks, etc.). ) and own shares in Facebook or other big companies. If a new company doesn't raise enough funds, it obviously can't make any investment in manpower or technology. Therefore, if entrepreneurs of new companies need to raise funds, they must deal with venture capital companies to find out the situation of funds and who is responsible for the direction of funds. This is a complicated process. \x0d\ Second, in a company that has been supported by a venture capital firm, the chief partner does not need to compromise with the venture capital firm. They can withdraw their funds and leave the board of directors at any time after making profits, which will make the operation of the whole company more complicated and even difficult-without the necessary financial support, it is impossible to re-create the management mechanism. \x0d\ In order to prevent this from happening, there are two main ways for entrepreneurs: to maintain good business conditions, not to worry that no one will invest, and to have a good relationship with venture capital companies or chief partners. \x0d\ At present, the cultures of various venture capital companies are quite different. Some companies may not pay much attention to their authority, so that all fund management companies have the right to speak and make suggestions on how to make investment decisions. But some venture capital companies only do this on the surface. In fact, investment decisions are completely in the hands of a few people. If entrepreneurs want to understand these cultures, who is the chief partner and who has the decision-making power, they should consult the enterprises that have worked with venture capital companies before. As far as I know, 80% of venture capital companies will have a collegiate decision-making process. \x0d\ This structure is very common and is standard in many IMF. Leveraged buyout companies, hedge funds and mutual funds (raised funds are invested in other funds) almost all adopt this structure. Venture capital companies do this mostly because lawyers give advice. \x0d\ We not only provide talents and technology, but also provide development strategies and partnerships. \x0d\ Seek adoption as a satisfactory answer.