An Research Of Venture Financing About Small And Medium-Sized Biotechnology Enterprises

Current under a double promotion of technology and market, bio-industry has entered a phase of large-scale industrialization. China's basic national conditions and economic development at this stage, decide to develop biotechnology enterprises of great significance. As high-tech enterprises, the small and medium-sized biotechnology companies have widespread problems in venture financing in its early stage. Solution to this difficulty continues, make it one of the hot topics and difficult subjects. Around this problem, scholars at home and abroad have a lot of researchs about it, but the systematic research from the perspective of venture capital financing is lack. In this paper, as the guide of the theory of venture capital financing and venture capital theories,combined with related datas, analyze small and medium-sized biotechnology companies Start-up capital demand and supply, and venture capital financing and venture capital and other issues, finally made a number of proposed solutions to this problem.1.The financing demand and supply of the Start-up Small and medium-sized biotechnology companies. In Chapter 3 of this article, in the general theoretical framework of financing, we have a theoretical and empirical analysis about financing needs and supply of the small and medium-sized biotechnology companies seed period and start-up period respectively. Study shows that: (1) capital markets, especially venture capital market can not make adequate supply to its capital demand; (2) In the venture capital which biotechnology enterprises get, the capital which invest to the period of seed stage and start-up stage are relatively small. (3) There are variety reasons of difficulties in financing, related to the relevant policies, capital markets and its own bio-industries and so on.2.The financing of small and medium-sized biotechnology companies and venture capital. Chapter 4 of this article, based on the asymmetric information theory, the risk of investment theory and asset-specific theories, Analysis the "three high" characteristics, namely the high-risk venture capital financing, and a high degree of information asymmetry and the two high Asset Specificity, which are the three main characteristics of the small and medium-sized biotechnology companies; at the same time, an analysis of a series of measures which venture capital face the "three high" characteristics of it, including the phaseing investments, value-added services under high-risks, the moral hazard and adverse selection under asymmetric information, the relevance between the two asset-specific investment and venture capital. Studies have shown: (1) The "three high" characteristics are the root of its financing difficulties; (2)Venture capital is the best way of its early stage.3.The analysis and application of the biotechnology business venture financing model based on venture capital financing. Chapter 5 of this article, cited and analyze the basic model of corporate finance, and its two expansion models, namely, monitoring model and help model. According to the above, we gave a comparative analysis of two investment wishes. Study shows that: (1) An valuable biotechnology projects may not be financing effective due to can not meet the financing conditions; (2)Venture capitalists owning expertise can effectively identify the actual value of biotechnology project or companies; (3) Monitoring and help can effectively enhance the probability of success and reduce the private proceeds of entrepreneurs because of moral hazard. (2) and (3) can effectively improve the financing conditions to make financing feasible which can not be feasible in general situations. This explains why the general investors are reluctant to invest biotechnology start-enterprises, but venture capital are willing to invest it and can invest it, which is the core issue of this article.4.The empirical case of venture capital financing based on risk investment in small and medium-sized biotechnology companies. In this paper, Chapter 6, based on the above theory, useing the examples of Cathay Industrial Biotech, analyze it's financing model, sum up experiences and enlightenments. Study shows that: the case effectively confirmed the theory points and the model analysis in the paper, including asymmetric information in start-up biotechnology companies and risk investment uncertainty, the relevance between entrepreneurs asset specificity and venture capital, the importance of risk prevention of venture capital financing under asymmetric information, and so on. Thus, make success for biotechnology financing of small and medium-sized enterprises, the first is to expect and to control the financing risks; Second, enterprises should have their own core technology products, to create core competitiveness.5.Conclusions and suggestions. Chapter 7 of this article, a summary and conclusion of the study. Major conclusions: the difficulty of venture financing , which is the refly of the "three high" characteristics of small and medium-sized biotechnology companies; Venture capital, which is the best way of venture financing of Small and medium-sized biotechnology companies; System construction, which is the basic guarantee of venture capital financing of Small and medium-sized biotechnology companies. Suggestions: To develop venture capital, to broaden the financing channels for the Start-ups; To promote biotechnology companies GEM, regulate the exit mechanism for venture capital; To develop biotechnology enterprise technology market, start building a platform for property financing.