Studies On The Quit Mechanism And The Quit Time Of Venture Capital

From the appearance of VC in America in 1950's to the rapid development after the Second World War and to the appearance in China in 1990's, there have been a lot of difficulties. VC has stimulated the development of high technology industries. In our country, the successful VC cases are not many. Many of them are in difficulties from the beginning. The reason is the defect of the quit mechanism and short of technology to assess the quit time. When VC enters into an enterprises, it aims at amplifying the capital, composing investment and the maximum of it's earning. Only if the quit is successful, is the running of VC market more meaningful. Easy and smooth path for quit and suitable quit time is the key to maximize the earnings of VC and the key to the development of VC. At last, this will promote the development of our economics. All of these are the reasons and significances of why I choose "studies on the quit mechanism and the quit time of venture capital" as the title of my thesis.This paper is made up of two parts. The first part points out the history of VC, the present conditions of VC in our country and the phases of VC. These are the theory bases of the whole paper. First, we study on the history of VC and focus on the history of VC in America, as VC has originated from it and has developed very well in it. Second, we brief the present conditions of VC in our country. VC originated late in our country and has developed slowly. This is the base of the study on the quit mechanism suitable for our country. Third, we study on the phases of VC and classify it according to the accepted method. Then we explain the main characteristics of each phase. This is the base of the study on the quit time.The second part is the study on the quit mechanism and the quit time of VC. First, we study the quit mechanism qualitatively. Among the three mechanisms, IPO and merger are the positive quit mechanisms and accepted by many countries. But with the development of economics, the present quit mechanisms are not satisfied the needs of quit. Because of the rapid development of Capital Market, IPO mechanism has exceeded the merger one and has become the main mechanism. But after that, the development of economics made the needs to quit increase. The present IPO mechanism does not satisfy the need of quit, thus merger become the main method. But in our country, individual capital can't endure much risk and their abilities toassess the risk are not great. As a result, there is little individual capital enters into VC. In order to change the situation in our country, we introduce a new method, the mortgage and assurance mechanism. This is a mechanism that quit but enduring the risk of not obtaining the agreed gains. Second, we study the quit time quantitatively. The traditional method to assess the quit time is IRR and accumulative gain rate. But they either can't consider the accumulative gains or can't consider the time and risk value. They have shown their shortage in decision making. As a result, we introduce two methods, the EVA and the fuzzy mathematics method. The EVA is not the same as the traditional EVA. It is the value increase less the capital cost. The capital cost is classified as three degree according to specific situation, forming three warming quota. Fuzzy mathematics method make the key elements that decide the quit time as target elements. They include the quantitative elements and the qualitative elements. Then we study how they decide the quit time. This is the important breakthrough. The second part is the core part of this paper.