Strategy Research In Guiding Jilin Province's Private Capital To Venture Capital

Also known as venture capital, risk investment refers to investment behavior that under the premise of taking on risk, through scientific assessment and strict screening, professional investment institutions inject capital to companies or projects which have a potential prospects or whose market value are underestimated, and take efforts to achieve the high growth of venture business to gain high earnings. It is the origin and growth of venture capital that the United States has benefited from, and since World War II, it has firmly established the world's top status incn sciee, technology and economic. Especially in the last 20 years, risk investment has been developing at an alarming rate, bred a large number of corporate giants such as Microsoft, Intel, Apple Computer, Yahoo, and created a series of miracles in the history of American high-tech industry. Thus, risk investment is known as "the engine of economic growth" and "the cradle of the new economy." Risk Investment in China began in the mid-1980s, in which more than 20 years, and has played a role to promote the development of high-tech industry and the transformation of scientific and technological achievements in the more than 20 years. But generally speaking, China's risk investment is still in its infancy, and there are many causes such as institutional and historical reasons, but inadequate funding is still the main bottleneck. Without the broad participation of private capital, venture capital is difficult to develop more. Jilin's risk investment started late. Until 1999, the first venture capital company in Jilin Province, High-tech Industrial Development Investment Guarantee Co. Ltd. was founded and until 2007, there were only three real venture companies.Through the economic difficult period of 2000-2003, from 2004 onwards, the private economy and private investment in Jilin Province had begun to become active again. Jilin Province in 2007 achieved 390.098 billion yuan for total fixed asset investment, 201.291 billion yuan of which was for private investment, in the proportion of 51.6% of the province's total fixed asset investment, contributing 59.6 percent to the growth rate of total fixed asset investment. From this we can see that private investment in Jilin Province has become the most active factor of the economic development. Corresponding to that, private capital entering into the field of risk investment is less than 1% of the total private investment. So how to make use of private capital in our province to promote the development of venture capital industry has become an urgent need to address the problem. Based on the in-depth analysis of the development of private capital and venture capital in Jilin Province, this paper proposed the strategy of private capital participating in risk investment. The specific structure of the article is as follows:The first chapter deals with the possibility and necessity of the participation of private capital in investment risk, and from the point of private capital and risk investment, demonstrates the feasibility of a combination of both.The second chapter describes the research status involving private capital and risk investment comprehensively. In the part of private capital, it first defines private capital and private investment in concept and content, and then through comparative analysis of the differences between private capital and government investment, discusses in detail the uniqueness of China's private capital and forms of organization, and from the two angles of calling and industry analysis, expounds the direction of China's private capital investment. In the part of risk investment, it starts from the definition, introduces the two "cycle" of venture capital and its general characteristics, and combined with domestic and foreign-related research, focuses on and analyzes the forms of organization, funding sources and the withdrawal mechanism of China's venture capital.Chapter III starts from the good posture of the development of private capital and movements in the investment structure, illustrates that private capital is playing an more and more important role and has occupied a large proportion of the total investment, mainly in the eastern, developing fast in the western, the structure of which comes into a reality of "three worlds". Then, through analysis of the development momentum of private investment in Jilin Province and the opportunities and challenges it is faced with, this chapter states the development of private capital in Jillin Province. In the part of venture capital, it discusses the type of venture institutions, investment direction and stage of development and sums up the major features of risk investment in China. Then it analyzes the status of venture capital of Jilin Province, including the existing gaps and opportunities it is face with. Finally, it illustrates the obstacles to the participation of private capital of Jilin Province in risk investment, involving four aspects. The investment environment is urgent to be improved; channels private capital enters into are narrow; channels for private capital to withdraw are poor and investment is faced with high-risk; private capital concerns more.Chapter IV first establishes an index system of factors influencing the level of private capital, including target layer, criteria layer and main factors layer. Target layer refers to levels of the private capital investment; criteria layer refers to management, industry, investment environment and market factors. Management factors include quality of managers, enterprise organizational structure, leadership decision-making, staff incentive and restraint mechanisms; industry factors include a balanced level of industrial development, industrial barriers, the industrial structure; investment environment factors include legal environment, tax environment, policy-oriented, system innovation; market factors include the level of urbanization, the market level, the level of consumption. After the construction of index system, it evaluates the various factors that have impact on levels of non-government investment. The results show that: the investment environment factors account for 47.6 percent in private investment and play a decisive role in the development of private investment. Finally, according to this conclusion, combined with inadequacy of the construction of private capital investment environment of Jilin Province, respectively from legal environment construction, taxation and environmental construction, capital-withdraw environmental construction, system innovation and other aspects, proposes strategy of attracting private capital to participate in venture investment;Chapter V outlooks the prospects of private capital participating in risk investment.