| As the reform and opening-up is continuously deepened and market economy is gradually improved, "Venture capital" is emerging in our country, which provides an effective way for high-tech small-and-medium-sized ventures. After the entering in venture capital, new ventures can take a more optimal allocation of all kinds of resources, and the governance structure can be improved, which is helpful for the development of ventures. However, because of the economic crisis affection in 2008, the closure of some financing organizations makes the small-and-medium-sized ventures find it even harder to acquire financing. In such a large context, the problem about how to acquire money for entrepreneurs has been a hot topic of researches.This research focuses on the problem of venture capital financing as a part of entrepreneurial financing. In the financing, the problems such as how to choose the way of financing and how to make a further deal with investors as entrepreneurs are influenced by many factors, which belong to entrepreneurial financing problems. And the motivation of investing as investors are also influenced by many kinds of factors. Therefore, the influencing factors of venture investment decisions and entrepreneurial financing decisions are analyzed and classified in this paper, after that the factors we adopt in this paper are briefly analyzed. After that we take a brief description of VAM, which is an agreement between the investors and entrepreneurs under the uncertain conditions. In this agreement, the entrepreneurs enjoy certain rights to make up the losses for the disappreciation of the ventures when the requirements in the agreement are met. Otherwise, the investors enjoy certain rights to make up the losses for the overvaluation of ventures. As a result of information asymmetry, the specific situations of ventures are unknown to venture capitalists and the venture value is conservative estimated as the risk assessment is made as much as possible; While the entrepreneurs influenced by the characters of themselves are eager to acquire financing, so they often overestimate the venture value. All that mentioned above cause the differences of venture valuation, and VAM is designed to resolve this problem to make the financing go smoothly. According to the judgment conditions in the agreements, VAM can be classified into six kinds: Financial Performance, Non-financial Performance, Redemption Compensation, Venture Behaviors, Stock Issue and Whereabouts of the Management.Based on the theories above, a framework of our case study is proposed and the case is analyzed. Firstly, the product market, industry and the conditions of the ventures are described, and the advantages and development prospect are also analyzed. Secondly, VAM in this case is analyzed in the form of specific items, under three conditions including redemption without overdue dividend, the actual profit more than the guaranteed profit and the actual profit less than the guaranteed profit to figure out how to protect the investors'interests under different conditions in this case. Thirdly, to make a better analysis of the effectiveness of VAM, a simulation experiment is designed based on Monte Carlo simulation thought to forecast the cash flow of the venture in this case with the risk analysis tool named Crystal Ball. The data acquired by this experiment is analyzed for the effectiveness of VAM and VAM is valued according to the real options calculation. Lastly, based on the effectiveness analysis and value judgment of VAM, the conclusions of this paper are as follows: (1) The items in this case are beneficial to the investors because the items are only proposed in the conditions that requirements are not met without the rights of entrepreneurs in the normal conditions that requirements are met.(2) In the signing of the agreement, investors only care about their own interests without considering the effective of equity carve-out on venture value when VAM is triggered. |
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