Research On The Mechanism Of Venture Capital Based On Transaction Cost's Theory

Venture capital is an uncertain industry by the reason of uncertain investment prospects, principal-agent problems, depend on both professional skills closely, have to deal with asymmetric information, professional risk. It can be said, the whole operation process of venture capital, is a process of solving the problem of huge transaction costs. Transaction costs affect the risk of venture capital and efficiency directly, controlling the transaction costs means controlling the keys to the investment risk and the return. This dissertation would be begun by the theory of division of labor and roundabout production, and study the transaction costs fom the different steps of the venture capital, establishing the risk-return model of venture capital based on the horizontal and vertical division by the methods of document analysis, survey research statistical analysis, etc. From the perspective of division of labour, power efficiency, information, opportunism, It had been researched on the function and the law of the different transaction costs from the steps of financing, investment, and exit of venture capital. Then studied furtherly the supporting mechanism of venture vapital development by establishing two models including a transaction cost and a division mechanism.This dissertation mainly consists of five parts:(1) Theoretical modeling and analysis.(2)The characteristics of division system and function of transaction costs, influencing ways in the process of venture capital financing, and the theory analysis of controlling transaction cost in it.(3)The characteristics of division system and function of transaction costs, influencing ways in the process of venture capital investment, and the theory analysis of controlling transaction cost in it.(4)The characteristics of division system and function of transaction costs, influencing ways in the process of venture capital exit, and the theory analysis of controlling transaction cost in it.(5) According to the risk-return model for venture capital, analyzed venture capital's micro-effect and macro-effect based on transaction cos,and presented the countermeasure including perfection mechanism of division at the micro and macro level, increasing division of labor links,controlling transaction costs and improving the transaction efficiency,so as to promote the venture capital developping rapidly in China.The documentation of this article is from the venture capital journal, professional studies, research papers, Statistical Yearbook, case studies, expert's speech, and the large databases at home and abroad. Research material from Beijing Zhongguancun high-tech development zone, Wuhan Optics Valley venture capital enterprises. Conclusions are as follows:The first, venture capital is a kind of complex division system,it is composed of the horizontal division of labour, and the vertical divisio,and form a mixed division system.,and lies in the links of venture capital financing, investment, exit.The broad horizontal division system had widened the venture capital financing, investment and exit channels, reducing the risk of development of venture capital.It can improve the earning capacity of venture capital by extension the vertical distribution chain.The second, the division system of venture capital is also a very specialized division system. High degree of specialization are from the venture capital team that brings together a number of professionals who have versatile professional background and much experience on the one hand;and Carrys out extensive cooperation with the agency on the other hand.It had improved the venture capital professional.ability greatly through these.Thus, it enhance the venture capital's ability to manage the risk and provide value-added services.Meanwhile, the specialization has increased the risk of asymmetric information.The third, by establishment of income and risk model for venture capital, with the research methods of mathematical statistics, it can manage risk proactively, improve investment returns for the venture capital by combination of horizontal and vertical division system.The forth,based on the transaction cost model and the division mechanism model of venture capital,it had revealed the main cause of the venture capital development from the perspective of transaction efficiency, that is the division mechanism consisting of four parts:good credit guarantee, value creating?revenue sharing?risk sharing, can effectively enhance division power, expand the division width and depth of venture capital, Lengthen roundabout production chain continuously,improve the efficiency and return of venture capital,reduce the risk of the venture capital division system,that means reducing the risk of the whole operation process.The fifth, by empirical analysis,, from the different links of financing, investment and exit,it had proved indirectly the division model of venture capital at the micro level.According to the correlative analysis between the division level and the economic development, it had revealed venture capital development faster in the high level division areas at the macro level.Comparing and analyzing from these indicators such as the size of venture capital,the amount of corporation,investment distribution,etc.It had a conclusion on the development of venture capital by verifying the high level division,and confirmed that the venture capital development needs a more specialized division.Thus it had been verified the perfect division mechanisms can improve the transaction efficiency,and therefore promote the development of venture capital from the different regional institutions and policies.At last,the paper had studied the ways on controlling the transaction costs of venture capital, improving the efficiency of venture capital development in China from the start with division systems and mechanisms based on the empirical study.This research results belongs to a sub-project from the Humanities and Social Science Planning Project (09YJA790161) of the education ministry"Study on the Mechanism of Venture Capital Clusters According to the Theory of Symbiosis and Ecology".