Risk Investment Project Evaluation

As we know, Venture Capital (VC) is a new investment method. Project evaluation of Venture Capital is very difficult. So this paper aims at it.Firstly, the paper uses microeconomics principles to explain the nature that VC can get high return. Then the paper summaries research achievements at home and out abroad, and analyses the problems of project evaluation in VC world in China.Analyses about VC show that VC can monopolize the market to a certain extent by making innovation , meanwhile get Windfall Profit with high risk in the process of making innovation. So VC chooses developing high-tech enterprises, and VC has to withdraw because innovation would be away at last.Traditional project evaluation theories are unsuitable to VC project because of its special mechanism. It is known to all that VC has great effects on the project, so we should have two stages in evaluation process, including now conditions of the project and estimating its future after investing. The history of VC shows that entrepreneurship is the most important factor, and other important factors are technology, market, risk, and finance. Therefore the two-stage evaluation model includes four parts: enterprise capability, market, risk, and finance. We should use different evaluation methods in accordance with different indexes.Venture Capital has great effects on the project, so a two-stage evaluation model is advanced. It is reasonable to use different ways to evaluate different indexes.In the conclusion, the deficiency of the paper is summarized, and the future research topics are prospected.