Study On China Venture Capital's Exit Mechanism And Exit Ways

China venture capital starts from the middle of 80's in the 20th century. It is not late too much compared to the VC's development in Europe, Japan and Israel. However the speed of VC's development is slower than these countries. There are many reasons, but one of the most important reasons is lacking the proper VC exit mechanism in China. No matter what's kind of VC it is, the venture capitalists should withdraw their original investment at the 3rd to 10th year from when it starts. The process of exit of VC is not only the process in which the venture capitalist can make big returns, but also the process of VC's further growing independently. Without a perfect and complete exit mechanism, the venture capitalists couldn't withdraw their money from the venture firms successfully. Thus, the next step of venture activity circle will never come smoothly. Then it is very difficult for the whole VC industry continue to grow constantly.Through the comparison between foreign and domestic studies, we can see most foreign studies focus on the IPO as the main exit way. That is because their capital market is complete and good, so the IPO are their priority choice. In the view of the domestic study on VC, we care much at how to pick the exit ways of VC under the current conditions in China. Two purposes of this dissertation are following, for one thing, how to choose the suitable exit ways for the venture firms themselves, for the other thing, try to find the obstacles which affecting the development of China venture capital, and put forward to suggestions to tackle these problems.This dissertation gives the definition of venture capital in China market and the exit mechanism in general. Several common exit ways of venture capital (such as IPO, Trade and Sale, MBO, Liquidity etc.) are listed and analyzed respectively. Generally speaking, the IPO can make the venture capitalists acquire more utilities than those who can get from other exit ways. With the development of China current capital market and building of the multi-level capital market and forthcoming of China's NASDAQ, more and more medium and small sized high tech companies will choose IPO as their priority way to exit. The Trade and Sale of equities remains the important way for the venture firms to withdraw their investment. Because selling the equities or the project itself to the firms who are interested in the new technology and new product have many advantages, compared to the IPO. They are: easy to find the buyer, easy to sell at best price, and avoid the conflicts. When the market is dull, the fluidity of VC is more important to venture capitalists than capacity to make profits. MBO is also an important exit way for the China venture capitalist in the future, because MBO is propitious to the China's reform on the property right, to attracting more foreign venture capital coming to China, and also a good stimulus to the Management of administration in the venture companies.At present, venture capitalists in China are facing many obstacles. They are: the faultiness in the covering laws on the venture capital and warp of the government's role in VC; and underdevelopment in China's provincial capital market and backwards of property right trade; unsound consultant service system; barrier on the IPO in China; barrier on the trade and sale; barrier on the MBO and Liquidity etc. This dissertation makes a research on these obstacles and the reason behind. After that, some suggestions on how to tackle these problems and eradicate the obstacles are given accordingly. It is believed that those suggestions should play a big role in guiding the China venture capitalists to pick the exit ways effectively and financially.At present, China venture capitalists can draw on the study on the successful exit ways of the venture capital. This has both theoretic and practical value, and it also helps make right policies accordingly. This dissertation has its own limit, as it only analyze the choice of the exit ways, rather than the exit timing, exit degree and control right and arrangement concerning the withdrawal of the VC. These questions need discussing in other articles.