Financial Risk Control Of Venture Capital

Venture capital was hailed as "innovation, entrepreneurship and the creation of a miracle" and "a diamond studded in the United States economy " because of its great contribution .However, its high-risk nature brought many countries enormous losses. Especially in China, the introduction of venture capital was later, still in the initial stage, so its theoretical research and practice are in a beginning exploration stage. The lack of perfect investment environment and theoretical guidance and lack of awareness of venture capital swell risk of venture capital. In view of this, the paper systematically and comprehensively researches venture capital, a special capital operation, to enhance the consciousness of risk management on the basis of awareness of venture capital and study western venture capital theories to make some beneficial exploration on venture capital industry healthy development of our country.The paper combines the main research results from domestic and foreign theory and the practice to the venture capital, according to paper research need, and elaborates the conception of venture capital,characteristics,correlated factors,operational mechanism as well as difference with other correlated concept, to understand the venture capital; In this foundation, the paper carries on the thorough discussion to the financial risk of venture capital. According to the venture capital motion discipline, in view of the venture capital company, it divides the financial risk of venture capital into three kinds: fund-raising risk, investment risk and withdrawal risk. The characteristic that venture capital grading investment blends fund-raising activities and investment activities together, as well as vital role of the investment and the withdrawal in the venture capital, the paper makes the financial risks of two stages as major study. In the investment stage, option pricing model is applied to the value assessment of investment projects to make up for the limitations of traditional value assessment methods, and enhance the flexibility of the investment decision-making. And portfolio theory has application in investment decision-making, making use of projects portfolio strategy, subjects portfolio strategy and the main stage portfolio strategy to control investment risks. After contrasting many investment tools, Convertible Securities that their option characteristics make them have advantage of stocks and bonds are the first choice. Venture capital company involves in venture enterprise follow-up risk management by strengthening financial risk supervise and providing value-added services. IPO is the best way of many withdrawal channels, but M&A (merger and acquisition) is more popular in our country, because our country has not to establish a true sense of second-board market. So on the basis , establishing diversification withdrawal mechanism expands Venture Capital withdrawal channels to achieve the value of venture capital smooth realization, maintain the cycle of venture capital and reduce the financial risk of venture capital.