An Analysis On The Time Of Investment, Cost And Income Of Venture Capital In The Growth Enterprise Market When IPO

As an innovative financial instrument, venture capital (VC) can effectively promote the growth of economy and it is known as "the engine of economic growth". Venture capital associated with high technology industry, has become the most popular mode of investment risk investment. To launch the Growth Enterprise Market (GEM) in our country is to develop a complementary capital market, providing financial services to high-tech enterprises, as well as supply an efficient and quick path for venture capital to exit from the risk enterprises. However, in recent years, the venture capital’s investment behaviors on the growth enterprise market have exposed many malpractices, which seriously affected the sustainable development of the venture investment in our state. Meanwhile, these problems will also interfere with the operation of the GEM, and hinder the capital market’s development.Previously, domestic and foreign scholars mainly discussed relative topics about the VC in the GEM from the perspectives of the exit mechanism, the necessity of system construction and supervision. Instead, the researches on the relationships among VC’s investment income, cost and investment time are few. In this dissertation, we try to do a research about this topic to rich the research achievements of risk venture capital.The contents of this paper include five parts:introduction, literature review, the related theoretical analysis on the time of investment, cost and income of venture capital, analysis on the time of investing, cost and income of venture capital in the GEM, research conclusions and policy recommendations.The first part mainly introduces the research background, the significance and method of this research and it elaborates research train of this article and structure arrangement, and proposes the innovation points about this paper.The second part is mainly about the review of the literature from the domestic and foreign, involving Growth Enterprise Market and venture capital. The third part mainly introduces the concept of the time of investment, cost, and investment income and some relative theories. It elaborates the specific content of risks and benefits equilibrium theory, and explains the relationship among the time of investment, cost and income from the perspective of financial accounting. It also further elaborates the standards of venture capital classification and compares the differences of the venture capital in different economic and political environment, which provides a theoretical basis for further research.The fourth part is mathematical statistics. The contents of this part mainly include the description of the samples, Growth Enterprise Market’s overall situation, investing time-cost analysis about venture capital enterprises, time-income analysis. First of all, we choose281listed companies in the GEM from2009-2011, and conduct the venture capital enterprises which invest the risk enterprises before IPO as the research samples. Through the study of the time of investment, cost and income, we can find the related conclusions. In this section, we defined the time of investment, cost, investment incomes and IPO-returns and other related concepts, which provide a basis for data collection. We classified the venture capital into several groups by the type of industry, the region and the nature of the firms, and analyze the relationship between investment time, cost and income under different factors, and finally summarize the conclusions.The fifth part is the study conclusion and policy recommendations. The conclusions about this paper are as follows:First of all, from the distribution of VC, there are obvious differences about regions. The different distribution coincides with the regional economic development in our country.Secondly, the investing time of VC is too short in the GEM. The average time of investment is less than2years, which has a large gap compared with traditional venture capital investment cycle. Short-term investments will influent the price evaluation.Thirdly, the time of investment and the cost is negatively related, and the time of investment and the income are positively related, which are in conformity with the theories of investment. The longer the investment time is, the more it earns; the longer the investment time is, the less it costs.Fourthly, the rate of venture investment in the GEM China is remarkably higher, compared with different countries and regions. The data reflects a serious problem that the market price is overvalued in the GEM, which brings huge bubbles to the capital market. All those problems will finally affect the stability of the capital market and the development of capital market in China.Fifthly, there is a phenomenon that direct investment by binding sponsor broker, and behaviors of private equity and venture capital investment tend to homogenize. These issues can probably help up the artificially high rate of investments, and disturb the order of the capital market, finally hinder the development of capital market.Finally, according to the research results, we proposed some effective measures to regulate the behaviors of VC.The contribution and creative points are as follows:Firstly, the article exposes the problems existing on the GEM and complements the researches on the time of investment, cost and income of VC, by analyzing the performances of venture capital.Secondly, the work paper enriches the studies about the GEM and the VC enterprises and provides a solid foundation to make relative supervision policies. Since the GEM was launched in2009, its development faces many challenges. What’s more, venture capital in the GEM is also worrisome. This article, from new perspective that focuses on the time of investment, cost and income, certify that the super-high rate of investment by VC is unreasonable. And then, give the proposals for reformation.There are also some weak points in this paper listed as follows:Firstly, all the datum are collected by hand, and we eliminate the half-baked datum. Therefore, it may bring about bad influence of the effective of the samples, then, reduce the precise of the research.Secondly, the factors which are associated with the return of investment are many, but we just choose a part of those factors to study in this paper. Therefore, the conclusions may become inaccurate.Thirdly, the sample was selected from the listed company in the GEM from2009-2011, which is small. To find more accurate conclusions, we should increase the quantities of samples and do further research.