Study Of China's Venture Capital Based On The Capital Allocation Efficiency

Venture Capital is a kind of equity capital which is invested by professionals into emerging and rapid-growth enterprises with huge competitive potentials. Venture capital industry has become one of the most significant industries since mid- and late-21st century. The establishment of China New Technology Venture Capital Company is the symbol of the first step of China into this field. So far, there have been over 300 venture enterprises in China with more than RMB 20 billion capital. Venture Capital is playing a more and more important role in China's economy and also becoming the driver and catalyst of high-tech industry.In the first place, this paper introduce the concepts about venture capital and define the capital allocation efficiency based on the concepts of capital and efficiency, which is the different influence of capital on different enterprises, industries and regions. Then we demonstrate the influence mechanism of the venture capital on capital allocation efficiency from the aspects of industry structure. Next, we measure and analyze the allocation efficiency of venture capital. We constructs a model to measure the venture capital in different regions and use the data in 2004 to measure the technological efficiency and scale efficiency of the venture capital. With the computation, we achieve a comprehensive evaluation of China's venture capital allocation efficiency. Besides, we also make a comparison of the venture capital in different industries. Finally, as to the defects of China's venture capital allocation, we propose several suggestion and policies to improve the venture capital allocation efficiency in China.