Venture Capital Exits And Innovation Of Start-ups

The choices of the ways of venture capital exits affect on the start-ups'value and the profits of the venture capitalists and entrepreneurs deeply. And the development of the firms depends on the innovation. So the study on the correlation of the venture capital exits and innovation makes great sense on the protection of the investors. And it can help the firms achieve the goal that make the corporate value maximum.This paper shows that IPO could provide more profits for the venture capitalists and the entrepreneurs, and it could also provide the private benefits for the entrepreneurs additionally through keeping the control rights owned by the entrepreneurs. So the entrepreneurs prefer IPO. And the paper also discusses that the depth of innovation affects the choices of the ways of the venture capital exits: the deeper the depth of innovation, the larger the probability of IPO. Therefore the entrepreneurs have the incentive to increase the depth of innovation so that the corporate value and the profits of the investors may be hurt deeply.Then this paper will discuss empirical cases, XieCheng, Baidu, 3721 and YiQu, which IDGVC invested in. And the results are coincident with the cases in practice. At last, this paper gives some suggestion on the problems mentioned before.