Discussion On Model For Government To Guide And Supervise Venture Capital Funds

Since the 1980s when the Chinese government introduced venture capital mechanism to play its role in government-guided support of small and medium-sized high-tech enterprises, through two decades of development it has achieved such accomplishments as guiding nongovernmental capital from home and abroad to the venture capital industry, promoting the industrial conversion of technologies, supporting small and medium-sized enterprises (SMEs) for their growth, promoting employment and maintaining economic vigor etc. Thanks to the national regulation on venture capital, Interim Measures on Administrating venture capital Funds, which was jointly released in 2005 by ten ministries/commissions led by National Development and Reform Commission, in 2006 China's venture capital industry sees new opportunities for standardization development. Encouraged by the example effects from successful venture capital projects, nongovernmental and private capital as well as venture capital from foreign countries are flushing to China's venture capital industry. Under this new situation, research and discussion of what roles the government shall keep playing and how to play by learning successful experience from foreign governments and with considerations given to China's actual conditions will be of realistic meaning to the successful operation of governmental funds.Basic research approaches of this paper are as follows: analyze, explore and summarize the model for governmental or government-controlled capital to guide and control venture capital funds based on the meaning of venture capital and our country's practical issues, by learning the process for foreign governments to guide the development of venture capital and their successful experience and by use of relevant theories on venture capital, and then discuss the contents involved under this model so as to make some innovations based on previous research on relevant fields by others and provide approaches and methodology to resolve practical operational issues, thereby realizing organic combination between theory and practice and providing references for practical activities.This paper is composed of six sectors. Chapter One of, Introduction, analyzes the important role of venture capital for the survival and development of high-tech SMEs by summarizing the significance of SMEs in economic development and their development obstacles, deduces that government guided venture capital is an effective way for indirectly supporting SMEs, especially high-tech SMEs in their initial stage, and thereby introduces the core topic of this paper, i.e. what roles the government shall play when guiding commercialized private venture capital funds via equity investment and how to play such roles. At the end of Introduction are this paper's research approaches and analytical framework, as well as current status of related researches and professional background for my selection of research theme.