Analysis Of Venture Capital Financing System

In order to make China's venture capital become the "incubator" of thehigh-tech industry, the first thing is to solve the bottleneck problem--the problemof venture capital financing. China's venture capital has great difficulty in financing aspect and its scale is somewhat small, the cause of which is mostly lack of a series of venture capital institutions. Institutions are the game rules of a society. During economic analysis we have to use them properly to explain the economic evolution and economic realities of human beings. Although the Neoinstitutional Economics is established in developed counties, its instruments and theories are more applicable to developing countries, especially the countries that are under reform. So the thesis tries to explore the economic explanation of the development of venture capital financing, based on Neoinstitutional Economics, Game Theory and information economics. It also puts forward macroscopic and microcosmic thoughts to improve Chinese venture capital financing system and consequently promote the development of China's venture capital.The thesis consists of five parts. Foreword introduces the difficulties that venture capital faced in China and explains the reason why there's lack of venture capital in China at present.The first part analyzes the relationship between venture capital financing and venture capital financing system in a demonstrative way and points out that venture capital financing system is the core that affects venture capital financing issue.Venture capital financing is a system that must accord with certain economic logic, for macroscopic feasibility is based on microcosmic rationality. Thus it's necessary to analyze the economic logic and layout a satisfactory financing system. The second part is just the exploration of such economic logic and concludes that new institutional economics and information economics performs better than traditional microeconomics when discussing venture capital financing problems.The third part firstly gives a model to explain why venture investors choose to invest in venture capital institutions against investing directly by themselves. Secondly, the part analyzes the problem of adverse selection and gives a thought to solve it. Meanwhile some concepts and analysis methods of Neoinstitutional Economics are used here to explain what are institutions and the arrangement of institution. It points out that the venture capital financing institution ought to be a multi-level issue, that is to say, it should be a multi-level functionality framework within which is Under the core of financial resources, the support of multi-layer market, the constitutional structure, and middle-party organizations.The forth part puts forward the macroscopic suggestions for venture capital financing system and expatiate on venture capital system from the following threeaspects--the multi-level capital market, the pluralism of the venture capitalfinancing system and the legal system of venture capital financing.The fifth part brings forward the microcosmic system of venture capital financing, which is the arrangement of rights and obligations inside the venture capital organizations. The part also gives a solution to solve the principle-agent problem between the venture capital investors and the venture capital organizations.