Research On Follow-Up Investment Selection Decisions Of Venture Capitalists

Venture capital often adopts multi-round and multi-stage strategy, at each stage of investment, venture capitalists have the option to continue to invest or exit. How to reduce investment risk and improve the accuracy of selecting projects is the problem that all interest parties care and research. But in the current study, the research of the first round of investment decisions is more, and the research of the follow-up investment decisions is fewer. This thesis will be committed to the study of how venture capitalist choose the best follow-up investment decisions, and find out an effective way to resolve it, it is hoped to play a certain reference on the follow-up investment decisions.Firstly, through reading literature and organizing theory,to identify the impact factors of follow-up investment decisions, and put six impact factors including pre-investment breeding effects, current investment, expected return, expected risk, expected risk compensation rate and return on investment as the important property of multi-objective decisions. The emphasis is to carry out quantitative assessment on pre-investment breeding effects, expected return and expected risk, and to construct TOPSIS model that is based on entropy weight method. Through the analysis and processing of the six attribute value, we can select the nearest" ideal solution" project to invest.Secondly, when evaluating expected return and expected risk, on the one hand, using the option pricing theory, to put the value of the management flexibility into the following-up investment, at the same time, enterprise value is divided into basic value and option value, so it can make up for a deficiency of traditional DCF method on business valuation. On the other hand, according to Markowitz's mean-variance theory, to make the expected return assessment and expected risk assessment synchronization, and bring great convenience for the practical application; Meanwhile, specifically definition and study on the assessment involved in the relevant parameters of the Corporate Free Cash Flow and the Black-Scholes Model with the technology of the Monte Carlo Simulation in the whole process, and expands the parameter estimation from a simple "value point" to a reasonable "wave range", and makes the variable estimate closer to reality, to provide a new way for the quantitative assessment of expected return and expected risk.Thirdly, in the process of the evaluation of pre-investment breeding effects, according to hierarchical structure to construct investment effect evaluation index system and to assess with Fuzzy Synthetic Evaluation; to use Delphi method to modify AHP weight, this method overcome the Shortcomings that the AHP weight is not real weight and it can not directly involved in the operation, at the same time, it reduces the round of Delphi method, too.Finally, through case study, to evaluate the four projects of expected return, expected risk, pre-investment breeding effects one by one, and use the constructed follow-up investment decisions model to sort the four projects. According to compare the sort results with the investment practices to conduct a preliminary exploration for the feasibility and applicability of the model. It provides a reference decision-making ideas and methods to follow-up investment decisions for Venture Capitalist, and improves the scientific and accurate of the follow-up investment decisions.