Research On Improvement Of External Environment For The Development Of Venture Capital In China From Organization Pattern

Venture capital means investors raise money in a certain way, then launch that money into the unlisted enterprises which contains huge risk in loss but high potentiality in growing up and participate in the management and operation of those enterprises, and hope to obtain a large amount of capital added proceeds through transferring the shares of those enterprises. As a kind of capital with high risk and proceeds, venture capital can promote the economic development. It is beneficial for transferring the technology into the merchandise and industry. It also can improve the industrial structure and the efficiency of resource allocation, so as to advance economic benefits. Venture capital appeared in U.S.A in the end of the 19^th Century and was spread all over the world thereafter. In China, venture capital started up in 1985 and became the hotspot of development since 1996.According to international practice, venture capital is often established in form of corporation, entrustment or limited liability partnership. These three forms have different characteristics respectively in respect of inspiration, restriction, cost and financing. As per comparison with the features of venture capital, limited liability partnership is more complied with the development of venture capital, because it has advantages of limited liability and discards disadvantages of wholly person-united organizations. It is more stable than dormant partnership and more feasible than corporation. Its design meets the requirements of high and new technology industry and growing small and medium-sized enterprises, which is awfully valuable for the development of venture capital. Practically, limited liability partnership is the main form adopted by venture capital in the developed countries of the world.Before the revision of the PRC Partnership Law, venture capital in China mainly adopts the corporation form, which leads to the deficiency of low inspiration for manager, lack of effective supervision system and high cost. In 2007, the revised Partnership Law swept the largest obstacle in the practice of limited liability partnership in China. However, there still are some factors in respect of law, financing, human resource and culture adversely affecting the development of venture capital in China. It is necessary to improve the law, optimize the legal environment and promote corresponding systems and policies, so as to provide a better external environment for the development of venture capital in China.This paper includes four chapters. Chapter One briefly introduces the conception, features, function and historical development of venture capital. Chapter Two analyzes the characteristics of three organization patterns of venture capital and concludes that limited liability partnership is fitter for the development of venture capital through comparison. Chapter Three is about the organization pattern of venture capital in China and the obstacles for limited liability partnership. The last chapter gives some suggestions in respect of law and policy on the development of venture capital in China.