Mechanism Desighing Of Chinese Venture Investment Funded By Government

Backing on the high technology, venture investment is a kind of method which invests funds on the risk entrepreneurs or projects to achieve large returns, under the high-risks operating and the rules of reasonable governing mechanism. The venture capital abroad has already form a developed governing mechanism whose suppliers are of markets and competence; otherwise, Chinese are based on the government which exist especially serious information asymmetry, double moral hazard, more interference of government and imperfect governing mechanism. As a result, this essay aims at designing a correspondent mechanism of venture investment, and through comparing, models and examples to prove its effectiveness.The main content of this test is roughly divided into three parts. This thesis begins with discussing the basic concepts about venture investment, two kinds of typical principal-agent relationships, the necessities of mechanism planning, and the relevant theories. Besides, the developed organizational models and governing mechanisms and financial contracts will be introduced in the third charter, including limited partnership, Convertible security, and the allocation & contingent transferring of control rights. Second, this part with two sections is the core of the text which analyzes the suitable mechanism of venture capital invested by our government and also gives an improvement. First is to conclude the problems found in the macro institute environments and give some advices on the institute backgrounds. Then in the micro level, the most important is to reveal the rent-seeking activity of venture capitalists and demonstrate the contingent transferring of control rights between venture capitalist and entrepreneur. The thesis ends by analyzing with two examples to compare these two kinds of different arrangements and evaluating every contract based on the above theories.The main conclusions of research of this text includes:1,try to forbid the rent-seeking activity of venture capitalists; 2,to get the target of encouraging and restraining the ventures and entrepreneurs by the use of contingent transferring of control rights;3,venture investment must choose the best time to exit smoothly under the standard of maximizing the corporation's market value. From the role of the government, the market for property ownership transactions and capital flowing must be founded to support the smooth exit of venture capital.