China Venture Capital Exit Mechanism

Venture capital is a type of private equity capital typically provided to unlisted, high-potential, growth companies in the interest of generating a high return through an eventual realization event such as an IPO or trade sale of the company and then repeating similar investment procedures. Featured by high risks and high returns, Venture capitalists require huge profits in successful projects to offset losses occurs from failed projects. Therefore, the exit routes play crucial roles in the realization of income of venture capitalists. As a result, it is believed in this thesis that studies on exits of venture capital would be important.This paper starts with analysis meaning of the venture capital, features, as well as their mode of operation and capital market analysis of the relationship, come to the key of the venture capital is the success of withdraw from the venture capital, then through the mechanism of a comparative analysis of the differences can be found the venture capital withdraw connecting with a country's financial system, capital market development, the government's guidance, and so on. Subsequently the paper explains the mechanism connotation of venture capital and the four channels for withdrawing. Further in-depth comparative analysis of the venture capital from the performance of their respective channels, which concludes that: the four channels have their advantages and disadvantages, so the establishment of a multi-channel withdrawing mechanism will greatly benefit for the venture capital's exit. After finishing these analyses, on China's venture capital industry, as well as the mechanism of the status quo, particularly in the new changes of the capital market after 2007, focusing on the problems of mechanism in China's venture capital existing law legal system Constraints, inadequate capital markets, property rights, inefficient and the lack of the effective intermediary services environment. At last, considering China's venture capital industry, contact the actual situation, the author make some advice for constructing perfect the mechanism of venture investment in China: we can not choices a single withdrawing mode, we should set up the set of mechanisms for venture capital including: improving the relevant laws of venture capital; the establishment of multi-level capital market, including improving the construction of China's growth enterprise market; to foster a national property rights trading market in two areas; nurture and norms venture capital intermediaries. Through this series of initiatives to build and improve the venture capital mechanism in order to realize China's venture capital smoothly.