Research On Development Of Venture Capital Fund About Small-medium Enterprise And Government Actions

Small and Medium Enterprises'(SME) development is crucial and important to a nation's economic and social progress, and all countries'governments are caring much about this issue. Venture Capital (VC) affects the survival and development of SMEs, and governmental guide to VC is an effective way of supporting SMEs. China's VC has just begun, and the international experience has shown that governments'active role can greatly promote the development of VC investments, therefore, research on public policy issues of VC investments has a strong practical significance. From a perspective of public policy innovation, this article carries out a research on VC for SMEs'development, governments'positioning and how to play the role of policies; moreover, it offers a certain reference to practical operation of improving the government's operation and management, providing policy support and completing a general system.Through theoretical and model analysis, this article believes that the role of government is always to effectively guide the development of VC investments on the basis of correcting market failures and should establish a structure of balancing the demonstration effect and crowding-out effect. Through analyzing China's current VC fund for SMEs and its positive role, the existing main problems are in structure forms, investors, investment scale and efficiency, utilization, the lack of regulations on market system, which have formed a development bottleneck. The main reasons are: the moral hazard of VC development, the possibilities of market distortions caused by government's wrong positioning and government's failure in policy support. In comparison and drawing on international experiences, this article concludes that the government's role in effective governance covers two aspects: 1. to explore a'pattern of government promoting'for VC development; 2. to create a system environment for policies'effectiveness. Taking Jiangsu Province as an example, it decides to develop VC fund with the policy guiding SMEs VC fund as the main stay, and provides a supporting suggestion on government's promoting role for VC fund, completing VC fund regulations and laws and accelerating the development of VC intermediaries. Looking to the future, under the effective policy support from the government, the coordinated development of SMEs VC funds will play a more important role in the market economy and will bring forward a combined economic and social benefits.