Research On The Mode Of Operation Of Venture Capital Funds In Suzhou

Venture capital (VC) is a new kind investment vehicle, and it provides capital andnon-capital services to venture company, and becomes an important power to promoteinnovation of technology and accelerate economic development. VC has been introducedinto our country for almost20years, however，the development of VC is still in thepreliminary stage. Compared with USA and Israel, the number of VC, investment volumeand the number of portfolio are smaller. Because of the high risk of VC, market failureexists. There is a phenomenon called “red apple effect” in our country, and that means VCmostly invest into entrepreneurs which are in later stage. As result, the seed-stage andstart-up entrepreneurs cannot achieve enough capital, and the shortage constrains thetransition from research to actual production. Many countries establish the leading fund toresolve the problem, to attract the investment from private sector. The leading fund andventure capital investors will incorporate a hybrid fund, which mainly invest intoseed-stage and start-up entrepreneurs. Based on the sight of Common Agency, this paperresearches the operational mechanism of venture capital leading fund in Suzhou.