Research On The Choice Of Venture Project Investment Tools

Venture capital is a new kind of modern investment. It reflects the perfect combination of capital, technology, management and entrepreneurship. Venture capital can effectively support the development of risk projects, drive innovat ion and entrepreneurship, and promote the transformation of high-tech achievement as well as the industrialization of high technology. At present, the venture capital market has become an important component part of financial markets. With the boom in financial markets, a variety of financial tools were invented one after another, and more and more financial tools have been applied to the venture investment, which offers more choices for both investors and financiers of venture projects. This paper systematically studies the problem of how to choose the best investment tools of venture investments. It enriches the theoretical research of venture capital investment, and provides theoretical guidance for venture capitalists to choose the best investment tools scientif ically and rationally.There are a few studies on investment tools of venture capital investment. Based on previous studies, I divide venture capitalists into two categories: participat ive venture capitalists and profit-seeking venture capitalists, and study their choice of investment tools respectively. The purpose of participative venture capitalists to invest in venture projects is to maximize the project income as well as their own benefits by intervening the project. By applying contract theory and mathematical derivat ion, the comparison of the enthusiasm and effectiveness of the debt investment tools, equity investment tools and hybrid investment tools is made as follows. When use debt investment tools, venture capitalists intervene the project with high enthusiasm but low effectiveness; when use equity investment tools, venture capitalists intervene the project with high effectiveness but low enthusiasm; While an opt imal contract can be achieved when use hybrid investment tools. Under such contract, venture capitalists can intervene the project with optimal effectiveness and enthusiasm. As for the profit-seeking venture capitalists, their purpose is to invest along a certain path in stages, so that to maxim ize their final investment returns. A staged investment path model for three kinds of investment tools, bonds, equities and convertible debt is built. After a case study, I give the solution for the profit-seeking venture capitalists to choose the best tools. It turns out that under different investment scale, investment duration, expected yield rate and risk rate, risk tolerance, the invest return of different tools are quite different, so that we should compute and compare them in each case.Two innovations are showed in this paper. One is dividing the venture capitalists into to categories and study their choice of investment tools respectively; the second is the establishment of a staged venture investment path model for three kinds of investment tools.