The IPO Effect Of Venture Capital

Since the introduction of venture capital in 1980s, venture capital in China has been going through rapid development. They are playing more and more important role in foster economic increase, new venture development, especially in the“new economy”which is represented by internet technology. Venture capital is institution based investment, with the difference between China and the west; venture capital in China changed a lot, not only in action basis, incentive method but also in performance. In recent years, the research in venture capital is flourishing. However, theoretical research are overwhelming empirical research, mainly due to lack of data. After the opening of SME (small and middle enterprise) Market &GEM, the data is gradually available. I take advantage of this change to make a systematic empirical research of venture capital, reflecting the effect around IPO. Venture capital is part of private equity, usually not completed with public information, using IPO as an instrument, I can peep into the very private investment, understand more about it, knowing how to foster the industry. The thesis carry out a series of theoretical and empirical research, I build a model to explain the source of effect, use questionnaire to expand the dataset, use data around IPO to explain the effect of venture capital. I also bring a few suggestions to foster the development of industry, SMEM and GEM.The thesis is constituted of four parts as followsChapter 1 and 2 make part 1. Chapter 1 explain the background of the research, I also define basic concepts in this part. The research method, framework, main content and my contribution is also introduced. Chapter 2 is literature review,I reviewed literature on venture capital from China and the west, making the frontier of venture capital research. The first part is the basis of the thesis.Part 2 includes chapter 3 and 4. In chapter 3 I build a venture capital effect model base on Finance theory, information economy, prospect theory and game theory, explain that information, risk and cost are main factors influence venture capital effect. Chapter 4 explains the mechanism of venture capital effect base on chapter 3. These three factors influence the participants and then make the IPO effect change. The result indicates that venture capitals in China are smaller in fund size, less professional and provides less value-added service which makes the investment move to later stage, diffuse to traditional industry and cluster in wider range. Base on the result I make the hypothesis that venture capital capitals China make less contribution therefore, the effect of venture capital around IPO are less significant then their western counterpart, also ,the china oriented venture capital are making less contribution then foreign direct investment.Part 3 is constituted of chapter 5 to chapter 7. This part is making empirical research base on the hypothesis brought in part 2. The research is using value-added service before IPO, performance during IPO and long-term difference after IPO to do the comparison, explaining the difference between China and the west, and those among different backgrounds.Part 4 bring suggestions base on the result, aiming to foster the industry and economy.The contributions are as follows, 1. Different form the models base on agent theory reflecting the game of venture capital participants behavior, I build a basic model of venture capital, reflecting factors influence the venture capital effect. 2. I use the dataset provided by chinaventure group reflects the characteristic of venture capital in China which in the past are base on theory.3.I use the questionnaire, data analysis explain the IPO effect comprehensively and systematically...