Studies On Venture Capital Contracts

Venture capital is a new pattern of financing system with a unique contractual mechanism and theory, which plays an important role in the incubation of medium and small enterprises, the promotion to the development of high technology and accelerates the economic development of the whole country. ect, has been pay more attention to the government. But during the operation of the venture capital, because of the existence of the high uncertainty and information asymmetry, these bring on the agency problem and the decline of contract efficiency. Therefore, this paper analyzes the contract between venture investors, venture capitalists and venture entrepreneurs by principal-agent theory and contracts theory. The main purpose is to settle the agent problem, reduce agent cost and improve contract efficiency, at the same time, under the specific conditions of our country, some contractual mechanism is brought forward aiming at current situation and problem on venture capital contract in China. Thus, the main content of the paper is roughly divided into three major parts as follows:The paper first studies the contractual relationship between venture investors and venture capitalists. Begin with the organization patterns between venture investors and venture capitalists, make a comparison with the limited patterns and corporation patterns, further more a contractual theory model is set up, it pointed out that limited partnership is the most optimal and some advice is given out aiming at the organization's problem about our country.The paper second studies the contractual relationship between venture capitalists and venture entrepreneurs. Generally, the moral hazard is solved by investment strategy, investment tool and exit way. In the selection of investment strategy, venture capitalists prefer to selecting staged financing and united investment, because it can low the level of information asymmetry, disperse risk, strengthen the management of the venture capital project, give venture capitalists more choice; In the selection of investment tool, the convertible preferred equity have the advantage that common stock and debt don't have, so it becomes the most important tool, and now more and more venture capital firms choose each of them combined with the convertible preferred equity. In the selection of exit way,IPO is considered as the best exit way, but due to objective constraints, we should take flexible exit strategy, select proper exit way.The paper last studies the contractual relationship among venture investors, venture capitalists and venture entrepreneurs. As the venture capital operation is a dynamic interactive process, the analysis of the contractual relationship of the three can not be separated. Therefore, the paper finally, under the conditions of asymmetric information, by constructing the double principal-agent integration model, take the three parts contractual relationship analysis into a unified analytical framework, make a variable analysis about contract efficiency, and start from the agency costs, qualitative relationship are given to improve the efficiency of the contract, at the same time proved that the dual principal-agent relationship is the need for venture capital, the integration model provides a theoretical basis for strengthening the management of venture capital and designing of the venture capital contracts.