Study On The Decision Of Venture Capital Based On Real Options

Now days,under the background of rapid development of knowledge economy,the venture capital which is regarded as hi-tech industry incubators and national economic development devices has attracted more and more public's attention.With the growing number of venture capital activity,the uncertainty and risk of venture capital project become obviously,the operating flexibility and the adaptive strategy of venture capital project have displayed the great value which could not be ignored.Because of many shortcomings of traditional investment decision methods,so publics desired a new method which was more scientific.The real option analysis which is based on financial option theory has supplied a new view for venture capital decision.It not only enriches the connotation of option theory,but also supplies a new analysis idea and method for investment decision of enterprises and individuals.Real option regards the investment chance of management flexibility as a series option which could bring investment incomes.It greatly exceeds the limitations of traditional investment decision methods,well adaptes to the uncertainty and risk characteristics of the new investment environment,provided a new solution for evaluating the operating flexibility and strategic adaptability.After this paper reviews the primary domestic and foreign literatures of venture capital decision method based on real option,it finds that although research in this field at home and abroad is flourishing,and explore the direction of a more pluralistic,there are still two outstanding problems in the following has not yet been solved:First,the lack of real option theory to application-level specific analysis;Second,venture capital profects in the risk factors considered insufficient,incomplete description of the uncertainty.This study is the combination of these two as the starting point, I hope by introducing the real options way of thinking to discover the hidden options in venture capital in order to better improve the venture capital decision making.The main work:First of all,indicates that the traditional method of investment decisions in venture capital profects in evaluating the limitations through high-risk venture capital projeces with high profitability,future uncertainty and life cycle analysis.Secondly,for the limitations of traditional investment decision methods,this paper introduces the way of thinking of real option,and researches the option basis,the general parameter estimation,risk and investment implied by the stage of real options have been studied,demonstration the real options approach with a combination of venture capital decision-making and the theoretical basis for the applicability.Third,bases on evaluating the general model of venture capital decision,the application of real options method was appropriate improvements,the addition of new risk factors,make it more general practical.Finally,case studies,qualitative and quantitative research methods on the value of venture investments and calculation of the simulation,which verifies the validity of the improved method.This paper researchs on venture capital decision method based on real option by applying the thought of system theory.The main results obtained are as follows:TO the risk of venture capital in the theory leas,by comparing the risk and uncertainty,indicates the defects of the traditional understanding of the errors and the traditional decision making.The real option theory provides a two-sides thinking method which considers not only the NPV of underlying assets,but also the uncertainty,makes up for the shortcomings of traditional evaluation methods,so begins the theory is increasingly the majority of scholars,policy makers attention.According to the theory of venture capital phase of the venture capital division of operations,this paper indicates that the venture capital is a process of investment stage.From the perspective of options,investment behavior of these series has not only associated with multiple real options.To the former real option,it's exercise price by its own characteristics and other non-implementation of one or more of the follow-up value of real options decision.3,This paper describes the hidden-real option of venture capital decision theoretically.It indicates that because of the features of investment stages,so there are real options in venture capital.Phased investment not only for enterprises to manage flexible,but also to venture capital project has brought the value of options.Verify that the improved application of real options method. Combined with case analysis, Monte Carlo simulation method for improved decision-making process real option, in fact, the optimal investment of venture investment decision made more general real option approach, specific to portray the venture capital project the value of real options involved in its decision-making.To the uncertainty of this writing, management flexibility, real options as the main line, at the conclusion of the venture investment decision based on the general approach, based on real options analysis of venture capital decision making, for the feasibility, practicality and other proposed to improve the ideas, has some theoretical and practical significance.