Principle Of Operation Of The Industrial Investment Funds And Development Strategy Research

Venture capital is esteemed as a creative financial system that has its enormous impact on upgrading industrial structure and speeding up the development of economy in the New Economy. It can be proved by the great influence of venture capital on economy boosting in USA. Our government has realized the importance of venture capital and has employed positive policies to promote the venture capital in China.This essay introduces the concept and definition of venture capital and its developments in USA, Israel and Japan and the government policies abroad. It analyses the seven factors that influence the venture capital-IPO, labor market rigidities, financial reporting standards, pension funds, macroeconomics variables, government programs and capital gain tax. It also analyses sorting problem and incentive problem that are very important to investors and pointed out seven kinds of exit mechanism. It displays the balance status in different stages among the investors, venture capitalists and entrepreneurs by employing the game theory. Because the asymmetric information is always a problem that bothers the venture capitalists, the essay points out the venture capitalists can reduce the moral hazard by monitoring and providing valuable services. Venture capital has now been in China for more than ten years, but there are still many obstacles. This essay analyses and divides the eighteen barring factors into four groups and lays out the development strategy of venture capital.