Agency Problem, The Organizational Forms Of Venture Capital Fund And The Financing Of High-tech SMEs

The venture capital funds with different organization forms often face different agency problems, which the performances of these funds are different. According to different Organizational forms, venture capital funds can be divided into three categories: First, government-oriented fund. Athough the government capital can reduce the financing costs of high-tech firm, the agency cost would be high because of the lack of effective supervision. Second, private venture capital fund. Although venture capitalists can reduce agency cost through monitoring, the monitor cost and high expected return rate would increase the financing cost of high-tech firm. Third, government guiding fund. It not only can reduce agency cost by venture capitalists, but also reduce the financing cost of firm by cheap government funds. This paper proves that,(1) while the entrepreneur’s agency problem is very serious, and the uncertainty of the project is very high, the availability of government guiding fund is the highest, but the availability of government-oriented fund and private venture capital fund are very low.(2)although the government guiding fund may suffer collusion, the rent-seeking problem that government-oriented fund face is more serious.(3) the crowding out of the government guiding fund are lower than those of the government-oriented fund. In fact, this paper clearly explains why the government guiding fund is relatively successful but the government-oriented fund is very failure.