A Research On Venture Capital Contract Structure In China

Recently, venture capital in China developed very slowly. To explain this, there are lots of discussions about outside conditions, however, most of them neglect important inside conditions—research on venture capital contract structure. There is the relationship between venture investors and venture capitalists and the relationship between venture capitalists and venture entrepreneurs, which is described by a branch of the theories of the neo-institutional economics—contract theory.In venture capital contract, uncertainty, informational asymmetries and agency cost are the most important issues. Limited partnership system can be effective to guard against these problems in the relationship between venture investors and venture capitalists. Also, there are many effective mechanism to guard against these problems in the relationship between venture capitalists and venture entrepreneur such as control arrangements, compensation mechanism design, staged investments and financial tools selection besides the implicit contract—reputation mechanism and so on. Furthermore, these two contract relationships are not independent, but influence each other. This paper tries to study the way to influence between the two contract relationships as a whole.On the above basis, this paper discusses components of the venture capital efficiency and the relationship among them and constructs a simple venture capital efficiency model.Besides, this paper analyzes the lesson from Germany WFG from the point of the two contract relationships.On the basis of theory analysis and the Germany lesson, this paper studies the present situations of Chinese venture capital contract structure and presents the suggestions about improving it.