Optimal Equity Allocation And Reallocation In Multi-stage Venture Capital

Venture capital is a kind of high-risk and high return investment.With the development of venture capital industry,subsection investment has become the development trend of venture capital in view of the multi-stage of venture capital projects.The first step of venture capital is to evaluate the value of venture capital projects.On the other hand,due to the specialty of the field involved in the venture project,venture capitalists usually provide financial support for the project,and venture entrepreneurs carry out professional management,resulting in at least two stakeholders.Based on the above,we need to solve at least two problems.First,how to accurately evaluate the value of risk projects;second,how to make the interests of venture capitalists and venture entrepreneurs as consistent as possible.Based on the method of real option,combined with the characteristics of low cash flow of risk project,this paper focuses on the option value of risk project.Based on Geske model,a compound real option pricing model for multi-stage risk investment is established to accurately evaluate the value of risk project.Further,combined with principal-agent theory,considering the concave and convex degree of venture entrepreneur’s effort function and effort cost function,and the uncertainty degree of venture project,a venture capital model under various circumstances is established,and the optimal effort level of venture entrepreneur is obtained by solving,and the optimal equity distribution mode is obtained,so as to maximize the interests of both parties.Taking the marginal income and marginal cost of venture entrepreneurs as the starting point,the equity redistribution mechanism is established to encourage venture entrepreneurs to make greater efforts and improve the overall value of venture projects..