Research On Venture Capital Theory And Application In China

As an innovative investment system that supports business ventures, with its unique investment behavior and special relevance to the high-growth enterprises, venture capital has been developing rapidly in the past few years in China's economic practice. Concurrently with the investment behavior, a new capital market -- venture capital market-- has also come into existence. This market, which evolves from traditional capital market and aims to provide ownership funding for growing small and medium enterprises, has its unique features that are quite different from the traditional capital market. Based on Marxist economic theories, the dissertation refers to the research methods and views of western economics on this issue, systematically summarizes issues relevant to venture capital, investigates the characteristics and operations of venture capital market, reviews the experience of foreign countries in venture capital and especially in the micro-level, analyzes the problems China encounters in the developing venture capital and their causes, discusses from various perspectives the value positioning, goal setting and development path of the venture capital market that meets China's economic needs, and finally proposes views and suggestions for the construction of China's capital market system.Except for Chapter 1 - Introduction, the dissertation is divided into four sections. The basic outline is: Summary of macroeconomic theories of venture capital (concepts, meanings and operational systems) → Analysis of microeconomic theories of venture capital (information asymmetry, double principal-agency, corporate governance et al) → Comparative analysis of international venture capital → Model choice and support environment construction for developing China's venture capital.Section I covers basic theories of venture capital. In Chapter 2, the definition and nature of venture capital are discussed. First, by reviewing and compiling the definitions of venturecapital given by various scholars and organizations, a refined definition is provided from the perspective of investment systems: venture capital is a type of investment system that supports venture businesses, invests in the ownership of new high-growth enterprises, participates in some way in the management of the enterprise/project it invests in, and obtains high capital return through ownership transfers. Next, based on the analysis of the commonalities and differences between venture capital and traditional enterprise investments, the nature and characteristics of venture capital is discussed. It is pointed out that venture capital is a type of innovative investment system that supports venture enterprises. It provides not only the funding support for the formation and development of the enterprise, but also the value-added services In nature, it is a capital management process for venture business and the nurturing mechanism for large enterprises of the future.Chapter 3 covers the formation and development of the venture capital system. The formation and development of venture capital is an evolving process, which we divide into two stages. The discussion of formation of venture capital focuses on the process through which it comes into existence, that is, the process through which venture capital grows out of the traditional capital market. The discussion of development of venture capital includes how venture capital advances after it comes into existence. The reason why venture capital comes into existence is because it is an innovative system that responds to the profit-making opportunities created by the weakness in the traditional capital market in terms of venture capital funding. It is an investment system grown out of the traditional capital market. Venture capital has been evolving from "informal venture capital" (Angel Capital) to "formal venture capital" (Corporation and Limited Partnership).Section II investigates theories on venture capital, especially its micro-level operations. The complete venture capital cycle, including fund raising, investment, and fund return processes, is discussed in great length. Chapter 4 and 5 cover double agency and information asymmetry issues in venture capital, and the systems and mechanism established by the venture capital investors and enterprises being invested for reducing agency risks. Chapter 6 discusses the exit mechanism for venture capital. The exit of venture capital is the last stage ofthe venture capital cycle, and is extremely important to the normal operation of other stages of venture capital cycle. Successful exit is the key to ensuring attractive return for investors and new capital funding. A well-established exit mechanism for venture capital is necessary to ensure the high efficiency and continuous development of venture capital for a country. In this chapter, the efficiency of various transfer methods such as IPO, ownership transfer, company liquidation is compared, based on the exit of venture capital in some European and American countries. It is argued that despite the attractiveness of IPO, it is not necessarily a realistic choice for China considering the immaturity of its capital market. Therefore, by simply cloning secondary market as NASDAQ, instead of strengthening the fundamental system construction, the mistakes incurred in China's futures market will inevitably be repeated. As a result, ownership transfer is the practical choice for China at its current stage.In Section HI, a comparison and summary of the development of venture capital home and abroad are provided. Chapter 7 describes the status of venture capital development in the U.S., Europe and Asian countries and regions, with a comparison and summary of the successes of these countries. Chapter 8 analyzes the development and current status of venture capital in China, presents the experience and lessons learned through its successes and failures, investigates the reasons for lack of success in venture capital in China, compares China's and foreign countries' venture capital, and summarizes the lessons we can learn from them.Section IV discusses the model for developing venture capital in China. In Chapter 9, based on theoretical analysis, other countries' successful experience and China's reality, it is argued that the goal model for China's venture capital is one that is market-guided, agreement-based, and one that utilizes civil capitals as its main component. Based on our economic and legal realities, venture capital in its current stage should support the creation and development of small and medium enterprises that have growing potentials. Sources of capitals are enterprises, wealthy individuals, foreign capitals and the government. Venture capitals exit through joint purchases and IPO. In Chapter 10, based on the role of government in developing venture capital, the support environment for China's venture capital is described. Venture capital is a type of high-risk investment, with extreme externalities anduncertainties. This will eventually lead to market's lack of control, and the government is required to take appropriate measures to correct it. Therefore, the government must build a nurturing external environment in legal, policy, system, humanity, and market sectors. This is a necessary condition for the smooth operation, and the system guarantee for the healthy development of venture capital in China.