Research On The Determinants Of Entrepreneurial Investment Exit Return

The development of entrepreneurial investment means a lot for the development of Chinese economic and society:on the one hand, with the deepening of reform and opening, in order to achieve sustainable development, China’s economic structure facing restructuring (or transition) issues, this shift not only needs to change the role of government, but also needs the support of the relevant financial system, particularly the support of entrepreneurial capital; on the other hand, the impact of global economic crisis has not been eliminated, all economies are still at the recovering stage, China is also not immune to the depression, so China requires technological innovation and new economic growth point. Thus, China’s internal and external environment determines the need for the development of entrepreneurial investment This paper aims at the depth exploration of the entrepreneurial investment market which acts as an essential role of the China’s capital markets system, and analyzing the main object and the operation mechanism of investment, especially research entrepreneur capital exit situation and identify the factors affecting capital exit returns, in order to provide practical guidance for the development of China’s entrepreneurial investment market in the future.This paper make a precise definition of the investment, entrepreneurial investment exits and entrepreneur investment returns as the base for analysis. This paper combine the theoretical and empirical method; First, through literature review of previous studies, and the use of real options theory, information asymmetric theory and theory of the risk-benefit to identify the determinants of entrepreneurial investment return; then selected study variables and expressing research hypothesis of this article; Finally, use the correlation analysis and regression analysis to analysis the affecting of entrepreneurial investment return. This paper selecting138enterprise at the GEM as the data sample for empirical analysis before on December31in2012; variable data come from the prospectus of the enterprise at WIND database.The main conclusions about the present situation of our entrepreneurial investment in this paper:according to the source of entrepreneurial capital financing funds, we find that the capital most come from the direct investment and non-listed companies. From the analysis of the growth of entrepreneurial companies, we find that the amount of capital invested in the expansion stage of enterprises is the largest, the investment at the seed stage decrease year after year, while the investment at the expansion and maturity stage increase year after year. At exit stage, most investors Select IPO, M&A and repurchase as the way to exit, IPO is the most popular way to exit by investors and showing a rising trend in recent years. By comparing the return of exit by different ways, we find that the return of exit by IPO is significantly higher than other way to exit capital by our analysis, the return of exit by IPO maintained at4.86times in2013, while a certain loss happen through the buy-backs and clear to exit. Through the descriptive of the variables statistics showed that:the average return of investment exit at the GEM is approximately7.43times between2009-2012; the number of entrepreneurial investor involved in one project are generally not more than three. The investment of individual investors is generally10,000,000-20,000,000; investors generally invest for about1-2years in one project, the investors hardly invest more than seven years; about71%enterprises favored by the investors are the high-tech enterprises in GEM. The main conclusion from empirical analysis are:(1)The longer period of entrepreneurial investment project can get a higher return.(2)The larger initial investment of entrepreneurial capital get lower return.(3)The return of entrepreneurial investment in high-tech industry is higher than invest in traditional industries.(4)The higher operational risk of entrepreneurial enterprise can get higher return of entrepreneurial capital exits.(5)The location of entrepreneurial enterprise, the number of investors and the financial risk of entrepreneurial enterprise have no significant correlation with the returns.Through the theoretical analysis and empirical analysis of the impact of entrepreneurial capital exit return factors, and considering relevant conclusions drawn from the previous analysis, there are some new laws can be found here that the investor behavior has a strong effect on the return of entrepreneurial investment and investors enter into the entrepreneurial enterprises have a significant effect on eliminating the information asymmetric; the effect of the enterprise risk cannot be ignored as well. There are some no obvious influencing factors, which can be blamed on the differences between Chinese entrepreneurial capital market and the foreign mature market. In order to promote the China’s up-and-coming entrepreneurial capital markets to develop healthy and grow sturdily, this paper considers that give a clear solutions to deal with the problem of unbalanced entrepreneurial investment development in different regional as soon as possible, and we should eliminate the excess capacity and increase the efforts to support high-tech enterprise; increase the disclosure of the entrepreneurial investment industry information; further developing the GEM market of China and expand the channels overseas market listing; formulate a long-term development strategy of the entrepreneurial investment market and transform the functions of government and decentralize the authority of government and service to the entrepreneurial enterprise whole-heartedly.