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On The Financial Support To The Development Of High-Technology Industry--Venture Capital Mechanism Research

Posted on:2001-05-10Degree:MasterType:Thesis
Country:ChinaCandidate:W H TanFull Text:PDF
GTID:2156360002452820Subject:Investment economy
Abstract/Summary:PDF Full Text Request
The development of the world's science and technology is leading us to a new economic era. At present in China it is very urgent to develop venture capital, a strategic task in the economic growth which is in conformity with the trend of readjusting and upgrading traditional industry structure driven by the high-tech industry and fostering new growth points in order to realize sustainable economic growth.High-tech companies are the principal microbodies of the hightech industry and the very bearers of the commercialization and industrialization of high-tech achievement. Traditional companies usually raise funds through the following two ways: one is the indirect financing from commercial banks, another is the direct financing from securities markets. But it is difficult for high-tech companies to get funds from traditional channels due to their special demand in financing. The traditional investment and financing system is now challenged by the wide-ranging demand raising from the high-tech industry and a suitable investment and financing system is required to meet the needs.Foreign countries' successful experience show that venture capital is a major investment and financing system to high-tech industry and offer it a strong financing support. Such a financing support lies on whether there is an effective capital operating pattern rather than the absolute amount of funds. Since venture capital is a commercial investing and financing system, profit has always been a crucial engine for it to offer support to the high-tech industry.In terms of operating mechanism, venture capital can be seen as a continual financing cycle. Lerner and Gemgers, two scholars of the Business School of the Harvard University who had raised the " Venture Capital Model ", divided the venture capital operating mechanism into three phases: phase of financing, phase of investment and phase of exit. These three phases together form an effective operating mechanism by interacting on each other and operating organically. Basing on this model I think that the way of operation of venture capital is highly fit the special financing demand of high-tech companies. The investment of capitalof rights and interests by stages, the reasonable organization structure and the standard operating process help to make capital, technology and human recourses together and get appreciation from the capital of rights and interests, and finally realize the benign cycle represented by "financing-uivestment-exit-reinvestment". It is a successful way to foster high-tech companies and promote the development of the high-tech industry. The trend of the development of global macroeconomic shows that the world's economic pattern is changing from the industry economy to a new economic pattern. Currently, the core issue of global economic competition has already been focused on both the innovation of knowledge and the developing speed of the high-tech industry. In order to take a fast speed in our country's development of high-tech industry it needs to strengthen financing support.- Venture capital in China is still in its early stage and its operating mechanism is yet immature. The commercialization and industrialization of high-tech achievements in China is going at a very low rate. The urgent task for us to fulfill is the innovation on finance. Currently, our country is in its period of transition from planned economic to market economic. From the practice of venture capital in our country and the results of the individual case research on venture capital we know that our country's high-tech industry can not be supported by only one type of venture capital. Hence a financial support system which focuses on venture capital as well as diversified capital operating modes should be established on the basis of our country's objective circumstance.The thesis gains access to the research of the venture capital industry by analyzing the microbodies of high-tech industry, and try to explore the relationship between high-tech industry and venture capital from...
Keywords/Search Tags:high-tech industry, high-tech company, Venture capital, financial support, Operating mechanism
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