Research On The Mitigation Effect Of Venture Capital On The Financing Constraints Of Start-up

In current economic eviroment and t background of the times,the start-ups play an indispensable role in Chinese economic system.However due to their own problems such as high operational risks and few hard assets available for mortgage,there is a serious mismatch between the role of start-ups in the economic system and the financial services they enjoy.Therefore,financing constraints are prevalent in start-ups in China,which seriously affect the improvement of corporate performance.With the development of venture capital,its role in solving the financing problem of start-ups has been paid more and more attention from scholars at home and abroad.After venture capital is injected into start-ups,it not only solves the problem of capital demand of start-ups,but also brings non-capital value-added services to start-ups and promotes the performance of start-ups.Firstly,this paper theoretically analysed the reasons for the formation of financing constraints of start-ups,then researched the operational mechanism of venture capital and found out the unique advantage to in mitigating financing constraints of start-ups.Secondly,according to the conclusions I proposed four verifitable hypotheses,using the cash-cash flow sensitivity model and the principal component analysis system which evaluates corporate performance to carry on the empirical analysis of the research hypothesis.Finally,it shows that Chinese start-ups generally face the financing constraints.However,with the involvement of venture capital and the development of venture capital industry,it not only alleviates the financing constraints it faces,but also promotes the improvement of corporate performance.In summary,this paper has proved that venture capital can effectively alleviate the financing constraints of start-ups.Venture capital is an indispensable part of China's current multi-level financial market.We should vigorously develop the venture capital industry to promote the joint development of China's venture capital industry and start-ups.