Download the Business Plan Template: https://clickhubspot.com/txr Make a FREE professional email signature: https://clickhubspot.com/f8l ----- Edited By: Andrew Gonzales Music Courtesy of: Epidemic Sound Select Footage Courtesy of: Getty Images For sponsorship inquiries, please contact sponsors@worksmedia.group Sign up for my newsletter https://compoundeddaily.com 👈 All materials in these videos are for educational purposes only and fall within the guidelines of fair use. No copyright infringement intended. This video does not provide investment or financial advice of any kind. #privateequity #venturecapital #howmoneyworks ----- Venture capital is a two hundred- and fifty-billion-dollar industry that takes your money whether you know it or not and puts it into promising start-ups like, FTX, Theranos, and WeWork but what do these people actually do all day and how are they different from private equity or hedge funds? Venture capital is a type of private equity and private equity is any investment made into a non-public company or security. A private equity fund raises money from investors to buy companies or other assets that are not listed on public exchanges and use them to generate returns. Private companies are much less transparent then public companies which are forced by the SEC and the exchanges to publish financials every quarter in addition to other information that they must keep current. Private companies are also harder to buy or sell since you can’t just open your Robinhood app and buy some shares. The difficulty and illiquidity of dealing with private companies means that investors expect higher returns and the managers running the funds can charge higher fees to compensate them for the extra work. They achieve those high returns through a number of different strategies, one strategy is a buyout fund that will take investor money, take out a large loan on top of that money and use it to buy a large established company that can be made more efficient by laying off staff and improving processes. Another private equity strategy is the rescue fund that buys a failing business for cheap and tries to turn it around, usually by laying off staff and improving processes. But if you don’t have the stomach for firing people all day then Venture Capital is the type of private equity for you. Most of the private equity industry works with established private companies but venture capital invest into businesses that are just getting started. Some private equity investments will be made into businesses that are nothing more than some ideas drawn on a napkin. But what does that actually involve doing? You wake up one day and find out you have become the CEO of a venture capital fund… congratulations, the top venture capitalists are all billionaires so if you play the game right you can be rich beyond your wildest dreams and all you need to do is follow these five simple steps. Step one is raising money, venture capitalists normally risk their own money in addition to money they raise from investors. You can’t get money off just anyone because venture capital is highly risky so financial authorities say that it must come from an accredited investor which is someone who has one of the three following characteristics. An income of at least two hundred thousand dollars [$200,000] if they are single or three hundred thousand dollars [$300,000] if combined with a spouse’s income, they can also qualify if they have a net worth of over one million dollars [$1,000,000] individually or with their spouse. Alternatively they can qualify to make these investments if they are a knowledgeable employee or if they have a valid series 7, 65 or 82 license which qualifies them as a financial professional. The SEC makes these rules to protect average investors from being preyed upon to make risky investments that they don’t understand and won’t be able to financially recover from. As a venture capitalist you can basically just ignore these requirements anyway because you are going to be targeting investors that can write a ten million dollar check over dinner and think nothing of it. If you need to raise money from average people, you can go through a pension fund, and they can make investments on their behalf because according to the SEC venture capital is less risky if there is a middle man. Why?... don’t ask to many questions that’s why. So it’s time to learn How Money Works to find out how ventures capitalists make and lose billions by pretending they know what they are doing.

• published: 20 May 2023
• views: 255395