What Are Venture Capital Trusts?
Venture investment trust refers to a trust that uses high-risk companies such as high-tech and the Internet as investment objects.
Venture capital trust
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- Venture investment trust refers to the use of high-risk companies represented by high-tech, Internet, etc. as
- Venture Capital Trust (VCT) [1]
- Venture Capital Trust It was established by the British Financial Act of 1995 for individuals to invest in small and medium-sized unlisted trading companies. By April 1996, 12 trust funds had raised a total of 105 million pounds. VCT is exempt from corporate tax and when dealing with its investments
- Venture capital trusts are trustees' trustees. They use the trustee s funds to invest in high-risk companies represented by high-tech industries as investment targets and to pursue long-term returns as investment objectives. Investment methods. Its characteristics are that the trust has a long closing period, and according to the characteristics of different projects, investment risks and returns are different, but generally it can reflect the principle of high risk and high return. The characteristics of trust determine that trust institutions have certain advantages in operating venture capital businesses compared with ordinary venture capital institutions (venture investment funds, venture capital companies, etc.). mainly reflects in:
- 1. Independence. The venture capital cycle is long and the amount of deposited capital is large. The development of venture companies requires a stable environment and the capital that can be freely controlled. However, in general venture capital activities, venture capital may be frozen or even withdrawn due to investor claims and debt disputes. Venture capital institutions will also be forced by investors to change their investment direction and investment model, which will ultimately lead to investment failure. Due to the unique institutional arrangement of the trust property, the trust is independent of the client, the trustee, the beneficiary and their creditors, and can be used flexibly without interference in a closed and secure environment to maximize the realization of wealth. Turnover and value-added. Different from the general operating environment of venture capital institutions, after the trust contract is concluded, the trust institution's operation of the trust assets will not be interfered by the client and its creditors during the trust period, making the venture capital activities relatively independent.
- 2. Diversity of financing methods. Venture capital has a high degree of investment, and the amount of funds required in each financing stage is very large. Individual investors generally do not have the corresponding capital strength. An important function of the trust is to aggregate small savings to form a certain size of fund collection, and then supply the pooled trust funds to those in short supply through loans, investments and other forms. More importantly, funds, movable properties, real estate, real estate, intellectual property, debts and other properties and property rights can be used as trust property. Therefore, compared with ordinary venture capital institutions, the financing channels of trust institutions are more extensive, ensuring that venture companies have Sufficient follow-up funding; trusts can also reduce the risks that these assets can bring through asset planning.
- 3 Value-added. Venture capital, as an investment product of social specialization, has objectively high risks. The trust institution takes trustees and manage wealth on behalf of people as the starting point and handles the venture capital business with the beneficiary's best interests as its purpose. Venture capital is carried out by professionals, and different investment portfolios are used to take advantage of scale to reduce investment risks . Because of its capital strength, it can also obtain the status of a major shareholder that is not easily obtained by ordinary investors, so it has effective voting rights, improves the success rate of venture capital, and protects the interests of its clients. The specific management methods of venture investment trusts are basically the same as those of equity investment trusts.