A Research On The Cooperation And Conflict Between VC Firms And Venture Companies In The Process Of Venture Capital Investment

In the present system of market economy,the function of venture capital investment does not only exit in the form of financial support,but also in an important role of innovation transformation,market development and enterprise management,therefore it is praised as "the engine of economic growth".In recent years,the venture investment experienced a rapid growth in China,and it will continue to maintain strong growth with the rapid rise of mass entrepreneurship and innovation supporting by the government.In practice,the cooperation relationship between VC firms and venture companies is more important than the venture capital itself.However,the cooperation mechanism between the two parties is now still immature for the sake that the venture investment in our country started quite late,VC firms and venture companies often face many kinds of contradictions in the cooperation.Conflicts may be intensified,resulting in difficulties of venture companies in listing or running business.In this case,the value of venture companies could not be enhanced or could even end in closedown,and VC firms could not achieve neither capital appreciation nor successful exit.The purpose of this paper is to help the VC firms and venture companies to seek matching partners,to establish an appropriate governance mechanism and coordinate relationship in the process of cooperation,to resolve problems and conflicts that may arise by using flexible strategies,and finally to achieve the goal of value-added in both venture capital and venture enterprise.This paper uses the basic theories of risk investment,entrepreneurship,Game Theory,Information Economics,Contract Theory and etc.,and applies the methods of literature review,normative research and case study.According to the logical sequence of "problem-reason-suggestion",this paper analyzes the game relationship between VC firms and venture companies,then explains the problems existing in the process of cooperation,and explores the root cause of conflicts,and finally puts forward the suggestion of how to select the cooperative strategies,how to avoid and resolve conflicts.Previous studies on the relationship between VC firms and venture companies only focus on cooperation,or on conflict,or only discuss cooperation and conflict from one side of VC firms or venture companies.Starting from the common point of view of the two parities,this paper analyzes the contents and causes of both cooperation and conflict,and explores the theory basis and policy arrangements on how to strengthen cooperation and reduce conflict,which could make up for the shortcomings of previous studies in a certain extent.Through a deep analysis of cooperation modes and conflict causes between VC firms and venture companies in the process of venture capital investment,referring the classic case of South Beauty,this paper verifies that the result of venture capital investment depends on the game,compromise and interaction in the process with a strong practical significance.This paper tries to propose countermeasures and suggestions on how to establish scientific cooperation mechanism,avoid and resolve conflicts,and then provides more references on how to setup and maintain cooperation relationship for the practice of VC firms and venture companies to achieve mutual benefit and win-win.