Research On Contract Mechanisms In Venture Capital Inverting And Financing Stages

Recently, the research on Venture Capital (VC) has aroused great concern in people's life. It shows strong vigor at the very beginning with its unique features. From the view of contract theory in this paper,investors, venture capitalists and entrepreneurs form double-sided agency relation. The asymmetric information during the three participators bring complicate interest conflicts, the optimal Pareto solution cannot be achieved. So the research on the purpose of this paper is to use contracts theory to solve a complicated benefits conflict that makes by investors, venture capitalists and entrepreneurs, thus raising the income of the whole risk investment.Firstly, the article introduces the background and meanings, the domestic and international overview of the contract theories and the research methods and the research way of thinking. Then the article looked back the venture capital concept and factors, general contractual theories, adverse selection and moral hazard. Also it explains the contract relation.Secondly, the article analyzes the contract mechanism during the financing stage between the investors and venture capitalists. From the view of adverse selection and moral hazard, we build up the related model respectively, analysis how dissolve and lower the adverse selection and moral hazard between the investors and venture capitalists. Then the article analyzes the contract mechanism during the investing stage between the venture capitalists and entrepreneurs. In this part, we pay attention to the choice of financial investment tools and investment methods. This part is an analytical point of this text.In the end, the article gives us the conclusion and outlook.