The Research Of Developing Fund Of Funds For Venture Capital Guiding Funds

The thesis analyzed the history and market position of Venture capitalgovernment guiding fund. Based on the case study, the pros and cons of localguiding funds was discussed and compared with other benchmark.Afterwards, the thesis carried out some solutions to improve the effectivenessof Venture Capital industry.As a unique outcome of1980s, the government guiding funds was bornedwith the commission of developing and cultivating the development of thelocal venture capital industry and financing SMEs, which have made apositive contribution to the venture investment market and merging of thestart-up enterprises. However, the support of the government features prosand cons. The positive impact of the government participation is directfunding and external environment to support and promote the development of the Venture Capital, while the cons come from the different positions betweenthe government’s role and the commercial VC’s pursuit, which caused someproblems that the guiding funds have to come up with. Meanwhile, withgrowth of the domestic private equity market, more and more social capitalrushed into the market, including the venture capital sector and took theleading roles afterwards. Confronting this trend, the government guiding fundhas to figure out what to do and how to do for a sustainable development.In response to the above-mentioned problems, this article at first analyzed theguiding fund at home and abroad, such as the SBIC program in the UnitedStates, Israel YOZMA fund, China Investment Company and Venture CapitalFund of Funds launched by China development bank based on case study andcomparative analysis. Based on the analysis, we knew the different roles ofthe government in the venture capital market. Secondly, the article describedthe history and current situation of guiding funds in China, focusing on theirpositive contributions to the venture capital industry and high-tech industry.Thirdly, we turned to the positive and negative sides regarding to the localguiding funds based on an on-site investigation of Shanghai Venture Capital.Finally, the thesis pointed out that it is better for government guiding funds toadopt and conduct the business model of Private equity fund of funds, andthen it listed several optimized solutions and inputs for the guiding funds to solve the problems, from the aspects including fund positioning, businessmodel, operation management and fund-raising channels with a conclusionthat the it transition to bear some government guide the functions of theparent fund market, is the best choice for the transformation of governmentguidance funds.