Financing Problemes Of Hi-tech Start-ups: Policy Design And Practical Development

The start-ups played a vital role for the promotion of economic growth anddevelopment. However, because of their micro-economic characteristics of high-growthand high-risk, the start-ups usually face difficulties in financing or they have singlefinancing channels, which seriously restricted the growth and development ofenterprises. Recently, the shoclars and practitioners are actively searching for solutionsof this problem, and the governments at all levels have made every effort to introducethe related policies to support the entrepreneurial activity and the start-ups.This dissertation combines three main channels of financing high-tech start-ups,venture capital, bank loans and trade credits, to illustrate the financing mechanism ofthe start-ups. Firstly, based on international experience and comparision among them,we develop a conceptual framework model to analyse the policis about development ofventure investment industry which supports furtherly the growth of start-ups. Secondly,using the samples of 450 high-tech start-ups, we empirically examine the impact ofventure capital on the entrepreneurial performance as well as the determinants ofstart-ups' capital structure, so as to understand the financing practice and mechanism ofstart-ups, and to give some evidence and suggestion for governments to design andimplement the policies.Based on the experiences of the development of venture investmet industry inAmerica, chapter 2 puts forward a conceptual model for the government to support thedevelopment of the venture capital industry. We then demonstrate this model byanalysing the related policies used by Germany, Israel, India and the European Unionand other countries and regions, and give some proposals to develop China's ventureinvestment industry from the perspectives of the financial supply, the financial demandand the construction of external market environment.Chapter 3 tests empirically the importance of the venture capital and theentrepreneurs, and the impacts of the characteristics of their participation on theentrepreneurial performance measured by the return on investment, the profitability andthe growth rate, respectively. In the all, we have not found the evidence that the venture investments in China play an active role of enhancing the performance of start-upsbecause the venture investments develop lately and its operational mechanism is not assound as that in America. However, giving the venture capital some control right andincreasing entrepreneurs' holdings of stocks will be reasonable alternatives to improvethe return on investment and the profitability, but these alternatives do not have positiveeffect on the the growth of start-ups.Combining the the micro-economic characteristics of start-ups such as less collaterals,high-growth potential and serious asymmetric information, chapter 4 points out theunique characteristic of capital structure of start-ups which is different from that of themature firms, and explores the main determinants of start-ups's capital structure. Firstly,the results show that the start-ups' debts mainly consist of the short-term debts and thetrade credit. Secondly, with regard to the determinants of the capital structure, we findthat the less collaterals and the weak relationship between the start-up and the bank, andthe conflict between the shareholders and creditors are the key factors that hinder accessto bank loans. At the same time, although the conflict between the entrepreneur and theoutside shareholders in the start-ups is not as serious as that in the mature firms, theentrepreneur has the incentive to reduce the level of debts, especially bank loans, toprevent the enterprise going bankruptcy as a result of the difficulties of meeting debts.By analyzing the growth process of a high-tech start-up subsidized by one of thegovernmental industy fund, chapter 5 discusses the ways for governments to advancethe entrepreneurial activities and to develop the high-tech start-ups, such as financialsupport, signaling and preferential policies. Moreover, we sum up the successfulexperiences of co-development and co-evolution of the high-tech start-ups and thestate-owned venture investment companies, and analyse the important roles played bythe entrepreneurial teams and the entrepreneurs' experience of management for thegrowth and development of the start-ups.