Bank Financing Versus Venture Capital

As a new driving force of economic development,the financing problem is an important issue in thedevelopmentprocess of innovative entrepreneurial enterprises.Especially under the background that our country is carrying out the strategy of innovative entrepreneurship development,as the main body of development,the growth and policy environment of innovative entrepreneurial enterprises attract more attention.Especially high-tech innovative enterprises is important component of innovative and entrepreneurial enterprises,the characteristics of it's high growth determines large demand for capital,yetit's high risk seriously restricts their external financing ability.Bank financing and venture capital,as two main sources of financing for high-tech innovative enterprises,represent two typical financing modes: debt financing and equity financing.Studying the influencing factors and mechanism of financing choice of high-tech innovative enterprises,and how to improve efficiency and maximize welfare through optimizing contractual arrangements under different financing modes.It has important practical significance for alleviating the financing problem of high-tech innovation enterprises and promoting the development of venture capital market.This paper mainly describes the differences in income distribution and control rights between the two parties under two different financing methods.By using the moral hazard and game theory,this paper constructs a duopoly monopoly competition model,and takes one enterprise locating in the oligopoly market which has the intention of technological innovation as the research object.Under the condition of bilateral moral hazard and incomplete intellectual property protection,how to choose the two financing sources between bank and venture capital and the important factors that influence the financing choice of innovative entrepreneurial enterprises are discussed.Moreover,the optimal contractual arrangements of both parties are analyzed under the condition of asymmetric information.In this paper,market competition is introduced when considering the model construction,which changes the former model which only starts from a single enterprise,and makes the model more realistic.Thus it provides an important reference basis for enterprise financing decision,and is also helpfulfor promoting the development of venture capital market of high-tech innovation enterprises.