Study On The Application Of Option Pricing Theories In To Venture Capital

Knowledge economy can not be developed without the help of venture capital as special "engine". The successful operation of venture capital can not be achieved without the normalization of investment decision. A growing focus has been on the decision theories but the breakthroughs of the theories are so difficult that have been stagnant for decades.This paper first introduces the concept, organization, environment and risk of the venture capital, and then the investment decision and deduces the character of the decision. This paper also identifies the research mindset and intrinsic drawbacks embedded in the traditional decision method (NPV) when applied in the venture decision process. Further, the paper introduce options and OPT(option pricing theories) and suggest real options should be used as descision method.Then the option mindset appliec in the decision process can overcome not only the ignorance of deal design but also settle the agent risk which can not be resolved with traditional method. To make the real options method available, this paper also construct application framework. At the same time, to test the effect of the application of real options, simplified cases have been provided. At last, application limits of the real options and the policy of the venture capital development have also been provided.