Development Of High-tech Enterprises In The Way Of Venture Capital Financing

We are facing the tide of knowledge-based economy nowadays, it isno doubt that High-tech industry is driving the tide in the new economyera, and there's no way to improve one country's competitive power but todeveloping high-tech industry. We will meet many difficulties in fundswhich can't be solved by traditional financing methods. In this condition,Venture capital comes out in our country and works effectively todevelop High-tech industry very recently. It is very significant to solvethe financing difficulties of High-tech industry in our country especiallythat of mid-small High-tech enterprises. So this thesis focuses on this hottopic. The paper includes four chapters. Chapter 1: A summary of High-tech enterprises. This chapter startsfrom the attributes of the High-tech enterprises and lays the foundationfor the research on financing problem of High-techs in the followingchapters. Firstly, It states the definition and the attributes of theHigh-techs. Then the author points out the typical route of thedevelopment of the High-techs. Because one of the characteristics of theHigh-techs is high risk, the author introduces the main risks includingtechnology risk, market risk, finance risk, management risk and fluidityrisk ,then the autor tell us all risks works in different ways with thecertain level of High-techs. Chapter 2: Several problems of financing of the High-techenterprises. In this chapter the author states the attributes of High-techenterprises firstly, and then points out that there are differentcharacteristics of financing and capital structures in the different phasesof developing for High-tech enterprises.Then the author analyses in thischarpter that the financing difficulties and obstacles of the High-techs inour country at present. The author thinks that the traditional ways offinancing can't remove those obstacles and the venture capital shouldbe introduced. Chapter 3: Venture capital: an effective way of financing for theHigh-tech enterprises. The chapter expatiates on the venture capital atfirst. And then the author uses the gap theory as the foundation of thecombination of venture capital the High-techs. Because the covenantbetween High-techs and venture investment institutions is the key todifferentiate financing attributes between High-techs and traditionalenterprises and also the logic starting point to analyse the combination ofthe venture capital and High-techs, then the author analyzes the choice ofthe financing covenant. At the end of this chapter the author probes intothe attributes and effectiveness of the corporate governance under thefinancing way of venture capital and thinks that it's effective in theaspects such as alleviating information asymmetry and as a stimulatingmechanism. And the author set an example to support these points. Chapter 4: The withdrawal of venture capital and issuing forfinancing of High-tech enterprises. The venture capital should choose anappropriate time and way to withdraw after its getting high income andsupporting the High-techs. And after that the author discusses mainly onthe establishment of Chinese Second Board Market, medium-small boardmarket and the financing problem of High-techs. This chapter alsoanalyzes the risk for the High-techs to financing on the Second boardMarket and puts forward some countermeasures and suggestions. The innovation of this MS thesis: 1. Introducing in the life cycle theory to analyses the differentfinancing attributes and changes in capital structure in the differentphases of development of High-tech enterprises. 2. Discuss the management of venture capital from the High-techenterprises themselves. This thesis probes into the covenant arrangementbetween High-techs and risk investors in dynamic way and it states howventure capital pushes High-techs to realize their self-development. 3. Through analysing the system arrangement such as time limit offinancing, financing tools, financing in stages and the allocation ofcontrol rights of the enterprises, it points out the effectiveness of venturecapital in op...