Study On Characteristics And Origins Of Venture Capital In China- Based On Dual Principal-agent Operation Mode

enture Capital has strategic importance for the improvement of a country's innovation ability and the development of innovation economy. As an effective venture capital system, its role can't be replaced by other means in a state's innovation process. Although modern venture capital has appeared in the U.S.in the 1940s, it is exotic to china and began to develop it until 1980s.After twenty years development, under government funding and policy support at all levels, China's venture capital industry is growing vigorously. Venture Capital has played a great role for the development of high-tech industry in China, which has led to the rapid development of China's economy.Facing the new round of "VC hot" in our country, how to use venture capital effectively has been the problem of Chinese theorist and venture capital practitioner which demands prompt solutions. So we need to further study the characteristics of venture capital and its formation mechanism.Then we draw up measures to guide and encourage the flow of venture capital to the development of high-tech industries.On the basis of the collection of literature and data, this paper conducted data processing and data analysis firstly. The course of development of venture capital is summarized in chronological order and made research perspective and research ideas.Venture capital's institutional change that single principal-agent operation mode to dual principal-agent operation mode is a reasonable and effective institutional arrangement.?Two-way chained principal-agent relationship is a networking and decentralized layer structures of two divisions.It leads to the greater efficiency of venture capital market transactions and market performance improvement.The dual principal-agent problem can be solved by effective contractual arrangements and prevent adverse selection and moral hazard. Contractual arrangement is the root cause of venture capital characteristics formation.In addition, they are affected by supportingenvironment. Based on above analysis, this paper put the analysis framework why venture capital characteristics exist.Then it followed by empirical analysis of China venture capital current situation. In contrast to Chinese and foreign venture capital data on each stage of funding, investment, management and exit, characteristics of venture investment in China are reached. Use of our small and medium-sized plate data, it analyzed listing and growth characteristics of venture firm and the specific impact that Venture Capital Institutions'characteristics on venture firm growth.Finally, it used analysis framework and specifically analyzed the relationship between principal-agent relationship that venture capital investors with venture capitalists and venture capital financing and investment and principal-agent relationship that venture capitalists with entrepreneurs and venture capital management and exit. It brought venture capital supporting environment into the analysis framework. Combining with the actual case, it analyzed specific causes why china venture capital characteristics formed and put forward specific proposals. Based on the theoretical and empirical analysis in previous sections, this paper gained the following conclusions:Firstly, imbalance characteristics of Chinese venture capital investment embodied in: Innovative industry is the main investment industry, but the traditional venture capital industry is caused by the attention; Investment mainly concentrates in developed area along sea; Investment phase doesn't show serious phase shift characteristics which are obvious in Europe and America. Venture capitalists in china lack of experience and aren't able to provide useful value-added services. As China capital markets are underdeveloped, the main exit way of venture capital is mergers and acquisitions. With the SME Board and the GEM official opening, exit channels for venture capital in China are gradually open.Secondly, the research results about venture capital on venture firms IPO are various. China capital market started late and venture capital development is far behind European and American countries. Based on data of small and medium-sized plate, characteristics which are different from other countries can be seen from empirical results: China venture capital market don't find the authentication function; The participation of venture capital companies leads to the higher under pricing; Venture Capital Institutions select enterprises with good prospects for development, and they are confident with enterprises'future; Venture enterprises has IPO effect.Thirdly, due to Venture Capital Institution's characteristics, it plays a vital role in the process of venture enterprise growth, which has been proved in theory and practice of foreign countries. However, based on the data of China capital market, this paper doesn't find significant characteristics of venture enterprise growth and the characteristics of Venture Capital Institution don't affect the growth of venture enterprise. Fourth, venture capital is complex investment process which has multi-party participation and there are obvious differences between ordinary investments with it. Affected by information asymmetries, the dual principal-agent operation is the basic cause of venture capital feature. When we analyze the causes why venture capital characteristics form,we should start work from this point.(1)The first principal-agent can be settled through the choice of venture capital institutions form and organizations and constraints and incentives in explicit contract between the two dominant as well as the reputation of venture capitalists. However, venture capital institutions in China are mainly government investment and the main problem of adverse selection and moral hazard is more serious. Irrational compensation system leads to incentive dysfunction. Managers in venture capital institution are mainly appointed or employed by government and self-reputation motivation is invalid.(2)The second principal-agent is the core of venture capital principal - agent relationships. It can be settled by venture capitalist constraints and incentives to entrepreneurs and their risk control and value-added services and venture capital exit mechanism. Venture focus on grabbing the money from the government sector and the constraints and incentives to entrepreneurs is fail. China venture capital institutions prefer to carry out equity investments and rarely involve in business management. Risk control and value-added services after the investment is not enough.Fifth, the integrity and maturity characteristics of venture-backed environmental systems directly affect venture capital feature. Financial market is the carrier of venture capital development and we should further improve it, especially the construction of the OTC market. It is vital to formulate laws and regulations which relate with venture capital development so that it can provide legal support for venture capital and standardize it. Venture capital development needs tax incentives which can attract capital to tilt to the high-tech industries in the form of venture capital. Good intermediary service system can significantly reduce the information asymmetry and transaction costs. We should regulate the development of investment-related agencies. Good talent environment ensures the healthy development of venture capital. We must establish a sound mechanism for personnel training and the full free flow of talent.