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“GP, LP” Definition: The help from a venture capital fund (VC) may be needed for business development during the prototype stage of a start-up. A VC is formed by GPs (General Partners) and LPs (limited partners). GP (General Partner): A GP is responsible for the practical operation of a VC which include planning investment directions and recruiting LP to provide funding. When sufficient funding is raised, a GP will search for investment projects and “add value” to the selected ventures, such as expanding their network. A GP is entitled to receive a 1.5-2.5% management fee on an annual basis from the total investment of the VC. When the VC withdraw from a profited investment, a GP may receive a share profit of over 20% of the investment return; if the investment of the VC recorded a good performance, a GP may even receive an amount of 30% or more. The shared amount is also called carried interest. LP (Limited Partner): A LP is mainly an institutional investor. Usually he/she is required to identify himself/herself under the “Securities and Futures (Professional Investor) Ordinance”, which means he/she owns an investment portfolio of not less than HK$8 million (please refer to the webpage of Investor and Financial Education Council for more information). More information: The limited partnership fund (“LPF”) regime is introduced on 31 August 2020 to attract investment funds (including private equity and venture capital funds) to set up and register in the form apart from limited partnership in Hong Kong. An eligible fund should have one general partner and at least one limited partner. The LegCo has also passed a bill in April 2021 to provide tax concessions for carried interest distributed by eligible private equity (“PE”) funds operating in Hong Kong. For more information on VCs, please visit Startmeup.hk. Source: Innovation and Technology Bureau HK Facebook Page, Company Registry, news.gov.hk Published by the Innovation and Technology Bureau HK Facebook Page, the “Inno-dictionary” series aims to facilitate startup newbies to understand the jargons related to entrepreneurship as well as innovation and technology.
"Series A, B Investments" Definition: Series A investment usually refers to the first investment a startup received from institutional investors after the stage of seed / angel investment. The startup would have developed a product prototype at this stage, yet it may usually generate limited revenue or zero profit. Series B investment refers to the second investment received from institutional investors. The startup would usually expand its business or market share, and develop a better business and profit model. Nevertheless, the definitions of Series A and B investments vary across industries and areas, and may change according to market conditions. More information: HKSTP Ventures and Cyberport Macro Fund provides investments to nurture early-to-growth stage startups. As announced in the 2021-22 Budget, $350 million and $200 million will be injected into the two Funds respectively and their scope will be extended to cover Series B and later stage investments. For more information on institutional investors, please visit Startmeup.hk. Source: Innovation and Technology Bureau HK Facebook Page Published by the Innovation and Technology Bureau HK Facebook Page, the “Inno-dictionary” series aims to facilitate startup newbies to understand the jargons related to entrepreneurship as well as innovation and technology.
“Angel Investors” Definition: “Angel Investors” are people who provide angel investments to potential startups. Angel investors provide not only funding but also business networks and operational experiences and advices to startups. Etymology: Why would the term “angel” be used for “angel investors”? The jargon “angel” originally comes from the Broadway theatre, which was used to describe investors for theatrical productions. In 1978, Professor William Wetzel in the U.S. began using the word “angel investors” to describe individuals who provide funding support for startups. More information: Investment Matching Gatherings (IMGs) are held frequently by Hong Kong Science & Technology Parks and Cyberport to connect angel investors and entrepreneurs. For more information on angel investors, please visit Startmeup.hk. Source: Innovation and Technology Bureau HK Facebook Page Published by the Innovation and Technology Bureau HK Facebook Page, the “Inno-dictionary” series aims to facilitate startup newbies to understand the jargons related to entrepreneurship as well as innovation and technology.