The Role Of Venture Capital On China’s Technological Innovation And Its Efficiency Evaluation

Technological innovation activity is a productive process which needs high input, faces high risk and can gain high income. Because of the high risk, the innovation activity can hardly gain financial support from the traditional fundraising channels, and it encounters serious financial restriction. The research has pointed out that the venture capital can stimulate the innovation activity obviously for it can not only offer capital and value-added service, but can also provide institutional support and incentives of interest for the technological innovation through designing new contractual mechanism. However, the empirical research can not reach an agreement on the effect of venture capital on technological innovation. In practical terms, the effect of venture capital on technological innovation includes three possibilities, which are positive effect, negative effect and no effect. The starting point of this paper is to find out the reason of the considerable difference between the theoretical and empirical research.On the basis of the existing research, this paper analyzes the mechanism of the effect of venture capital on technological innovation, and points out that the effect includes three parts, which are the effect of marginal output, capital increasing and value-added service. The effect of marginal output may be positive or negative, while the effect of capital increasing and value-added service are both positive, so the result includes three situations, which is positive effect, negative effect and no effect. The result can explain the considerable difference between the results of theoretical and empirical research of existing documents.In the empirical part, this paper using the penal data of China’s seven areas as research sample, this paper takes the venture capital stock, domestic R&D capital stock, R&D capital stock through technological spillover and R&D personnel as the input of technological innovation, and the patent applicant as the output. We can find out that venture capital in China plays a positive role on technological innovation through quantitative analysis, and we can also find that the effect of venture capital on technological innovation is one eighth of domestic R&D capital stock, and is far less than it is in American.Moreover, this paper appraises the efficiency of the effect of venture on technological innovation through DEA, the result shows that the efficiency of venture capital in most areas is low, and the condition of input and output is far away from optimal. The technological efficiency in most areas is invalid, and the feasibility of scale is in a state of decline except for individual years of Northeast and North China. This result presents a strong support to the former quantitative analysis, and it also points out that the development of venture capital industry still leaves much room to be desired.Finally, this paper comes up with four suggestions about the development of venture capital industry, the first one is to perfect the exit channels, and strengthen the construction of multi-level capital markets, the second one is to strengthen the construction of technological market, and perfect the mechanism of the transition of technology into product, the third one is to strengthen the protection of intellectual property, and perfect the mechanism of innovative encouragement, the forth is to increase the investment in the project which is in the seed stage, and strive to develop the Angel Investment.