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Venture Capital Approach To Risk Management Study

Posted on:2004-02-23Degree:MasterType:Thesis
Country:ChinaCandidate:Z L YangFull Text:PDF
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In an era of knowledge economy, economic growth and the increase of employment opportunity rely on successful innovation--namely Research and Development(R&D) achievements can be commercialized and industrialized effectively. In the course of innovation, venture capital, which is special financial instrument that offers financial and capital operation supporting for high risking projects, plays an extremely important role. Because early stage of scientific research has participation of venture capital in it, the cycle of scientific findings being turned into commodity has been already shortened from 20 years to under 10 years, which has promoted the growth of the whole economy greatly. There are many facts that influence the success of venture capital, effective risk management is undoubtedly the extremely key one among them. The author will probe into some successful methods of risk management on venture capital, and hope it can offer a little reference of controlling risk to Chinese venture capital which is in the predicament.1.Research BackgroundIn 1986, the first shareholding VC Company in China--China New Technology Pioneering Investment Company (CNTPIC) was established, which indicated the rise of venture capital in China and in 1998,after 12 years, CNTPIC was closed, which hinted that venture capital faced difficult situation in China. There are many reasons for the failure of CNTPIC, the important one is its weakness on risk management. Not only to the company, but also to the whole industry of venture capital in China, it is the important reason that causes venture capital to fail. Venture capital of China wants to break away from present predicament and be not in inferior position in competition with foreign venture capital after joining in WTO, it must solve the problem of risk management well.Just under such a background, the author selects the methods of risk management as the research object to probe into.2.Structure Of The ThesisThis thesis is divided into four parts. First, the author probes into two levels and general principle methods of risk management of venture capital. Second, according to the characteristic of venture capital, the author probes into three special methods of risk management of venture capital. These three methods are arranged according to the order in advance, in the course, afterwards.The main content of four parts of this thesis is as follows: The first part is two levels of risk management and basic principle methods. This part mainly addresses how to divide risk management of venture capital into two levels and the basic principle methods that are followed by VC. This text divides the risk management of VC into two levels, risk management of the venture enterprises and risk management of the venture capital firm. The division is regarded as the theoretical foundation of the methods of risk management to be followed. At the same time this part discusses the basic principle, methods and procedure that should be followed by VC, which is regarded as guidance to the concrete methods to be followed.In this part, the author first discusses the implication of venture capital and the difference between venture capital and traditional investment. Then the author divides the risk management of venture capital into two levels, risk management of venture enterprises and risk management of the venture capital firm. Then the author discusses the general principle, method and procedure of risk management.The second part is corporation governance structure and risk management. This part mainly deals with how to carry on risk management by perfecting corporation governance structure. Perfecting corporation governance structure can act the double function ofrestraining and encouraging administrator and reduce the risk that VC faces fundamentally. In this part the author discusses especially how to reduce moral risk by perfecting corporation governance structure.In this part, the author discusses relationship between corporation governance struc...
Keywords/Search Tags:Venture Capital, Risk Management, Venture capital firm, Risk Enterprises
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