Venture Capital Investment Market and Services in China

China as a developing country and transition country has its own venture capital market in a few details.

1. China's venture capital practice behind the international standard
The high-tech companies in China who were on different sources of capital, are going through a difficult process of development. Although China has some high-profile entrepreneurs in the high-tech industry, a large number of these companies (16,000 in Beijing, while the country exported 72,000) byInexperienced.

a) Serious information asymmetry
First, there is an information asymmetry between the managers of high-tech firms and other investors.
Second, there is an information asymmetry between high-tech companies and venture capital firms. From the international practice, both parties should be honest with each other and exchange information openly. Finally, add the venture capital investors value by its management and technologicalKnow-how to improve the performance of the company.

b) serious exclusionism
High-tech companies in China, especially those run by the locals, have a tendency to refuse to cooperate with outside investors.

c) High cost of investment
Chinese high-tech companies, lead mainly by the locals who are mostly under the control of couples and families. This ownership structure makes it difficult and costly to the usual practice for venture capital investments, follow belowreceived, the venture capitalist is an essential part of the ownership and control in companies

2. For the manager, but as a venture capital investors to retain control of majority
It is a common practice to require that executives from high-tech companies in China for the majority interest in working with venture capital firms. There may be many explanations for such behavior, but the main reason lies in the influence of traditional Chinese thought. This thinking is based onthe belief that you lose control of the company, without a majority stake or a leading role in society.

3. China lacks an infrastructure of service professionals to venture capital firms to support
The growth of venture capital involves not only high-tech companies and venture capital firms, but also intermediary agencies such as law firms, accounting firms and Assessment Center. Unfortunately, there is still no Chinese Agencies, the right services to the Venture Capital --Community.

Currently, venture capital firms in China to the various tasks of looking for investment projects shoulder, an appraisal of projects to avoid legal risks, to help plan the finances of the investing company and have the portfolio company at the exchange.

4. The legal framework for venture capital investment is insufficient
Although China's national strategy of "revitalizing the country through science and education," it is still the establishment of a legalFramework to support the venture capital investments. The Chinese venture capital community has been growing in the absence of adequate protection of the law.

5. The Chinese capital market provides insufficient exit channels for venture capital investment
The investment return on a venture capital firm rather than a year from dividends, but on the acquisition or IPO of companies. Such events require mature liquidity of capital markets, which China lacks itpresent.

Venture capital financing has become a dynamic system of modern financial products and services through the introduction of a number of innovations. Please visit online http://www.dynastyresources.net in New York City.

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