The Study Of Investment Stage Moving Backward Of DomesticVenture Capital

Since the first modern venture capital corporation, American Research and Development Corporation (AR&DC), was founded in 1946, venture capital has been widely accepted by the industry due to its unique capability of promoting technical innovation and increasing competition. Venture capital provides a solution for the demand and supply problem in the highly risky enterprises which cannot be solved by the standard capital markets. As a newly introduced vehicle, however, venture capital is different from the standard capital. The domestic investment industry has not fully mastered the essence of venture capital. Therefore, people tend to choose short-term venture capital. Few are willing to invest in the early stage of a company. In recent years, domestic VC investment has demonstrated the characteristic of PE. This may be able to reduce the risk of investing venture capital and secure the capital gain in the short-term. In the long run, however, this behavior has serious impact upon the investment industry. It will cause unfair competition between venture capital and standard capital, which eventually will lead to economic bubble. The study of extending the life cycle of VC investment will be valuable for the maturity of domestic VC investment market. In addition, it will help further research regarding the life cycle of VC investment.This paper addresses the issue of domestic VC investment by studying the history of VC, and explores the cause and influences of such phenomenon. It is organized as follows. Section one illustrates the research background and goal. Section two includes a literature review, which introduces private equity fund and venture capital, and the current status of private equity fund in China and future trend of VC. In section three, we study the history of VC in the United States and analyze the reason of the investment stage. We expect the result to be helpful for the study of the same phenomenon in China. Section four presents the late investment of VC. We explore the influence of VC late investment to China by compare the formation and investment environment between the United States and China. Finally, section four concludes the thesis and offers recommendations on the development and maturity of VC investment industry.