Research On The Legal System Of Foreign Venture Capital Investing Institution

In the Silicon Valley of USA, there is a very popular"big thumb rule", which means ten portfolio company that venture capital investing institution makes investments into, three are losing, three are surviving, three get into IPO process and the venture capital earns not bad, only one can get excellent success. This parlance clearly explains the very special features of venture capital, which include complexity, volatility and high risk.Venture capital has now become a fashionable form of investment, due to its unique effect on fostering and developing start-ups. Operations of venture capital can be divided into three parts, namely: Funding of the venture capital investing institution, making investments into the portfolio company, and exiting of the investment. In this venture capital's circulation, a series of contract structure and a complete set of VC investing institution related laws system is most important.In the year of 2006, which is China's capital innovation year, we should achieve the internal capital market's healthiness, encourage nongovernmental capital investing into portfolio company. At the same time, we should highly recognize that foreign capital is important for China's economic grow-up and the self- innovation stratagem's realization. In this article, we research on the legal system of foreign venture capital investing institution, which is just corresponding to this newest trend.Experiences of venture capital operations throughout the world ordain that, for the venture capital to succeed, a complete set of laws, rules and regulations that guarantee an amicable operational environment should be indispensable. Venture capital development in China is encountered by various issues such as insufficiency of capital input, shortage of venture capital talents, dysfunction of exit mechanisms, et cetera, which might be adequately solved by introducing foreign venture capital into China. All in all, to establish a comprehensive legal system governing the foreign venture capital is of immeasurable value to the full utilization and healthy development of China's foreign venture capital.