The External Determinants Of The Venture Capital Development

Venture capital is a very important source for the start-up firms so it is also called technical capital.Recent years,the scholars at home and abroad keep pay attention to the relative research about it and most articles are about its influence on corresponding start-up firms and on the society.They analyze the advantages and micro-economic working modes of venture capital.However,articles about the determinants of venture capital are almost from foreign countries,and relative domestic articles only discuss it in a descriptive way.There are also some domestic scholars test several determinants empirically,but little of them conclude the whole external environment integrally.This essay explores the dependency of venture capital on external determinants macro-economically and use a concept as the venture capital developing levels.The empirical panel data are from domestic provincial administrative regions during 2010 to 2016.This essay adds the variables accord with Chinese current positions to foreign models and summarizes the external environments as five parts,which are enterprise operating determinants,marketizing determinants,financial determinants,technical determinants and entrepreneurial determinants.I build random effect model,fixed effect model and pooled OLS model and use the multivariable sequential regression to test the question empirically.The empirical results show that all the determinants in hypothesis are significant except the marketizing determinants.Flourishing VC institutes,developed entrepreneurial environment,stable legal protection and the local government's emphasis on technical innovation are important for venture capital improvement.The degree of marketization and interbank competition have uncertain impact on venture capital,which is due to two opposite function.On the one hand,the VC industry has received great supports from the government recently.One the other hand,the direct investment to start-ups from government has crowding-out effect on the private capitals.Moreover,I found that clustering of start-up firms cannot attract the VC institutes effectively,but clustering of VC institutes can absorb start-up firms largely.Meanwhile,I specially selected the fields related to the "Made in China 2025"plan and "Internet Plus" to run the test again and found that the new manufacturing industries have higher demand on law environment,the technical environment and the marketization of price and commodities comparing to the TMT industries.For the government,the results show that government need to transfer its role from direct VC investor to the policymaker which should pay more attention to create a healthier environment for start-up firms and VC institutes.