Venture Capital Risk Control Study

The industrialization of high-tech is a costly as well as high-risk business, which makes it inadequate for the government to alone promote its development. Today, almost every country is trying its best to develop the risk investment (in China, it's generally referred to venture capital) to promote its high-tech industrial production. In fact, high-tech industrialization will go through a difficult and lengthy road without the strong support from venture capital for enterprises. Venture Capital is actually a market behavior, which means it involves strong professional and practical knowledge. Consequently, how to control its relative proper risk is essential to the success of the venture investment activities.Since 2009, as China's economy took the leading role in the recovery from the financial crisis, China's venture capital market has also ushered in unprecedented opportunities with a series of policies such as IPO restart and the success of the GEM Listing. Besides, the RMB funds have gradually occupied the mainstream of domestic funds supported by the relative policies proposed by Chinese government. In 2009, the venture capital have been collected 96.329 billion RMB, which is 94.56% of the amount of 2008. As the gradual increase in the scale of investment and fund-raising of China's capital market together with the historic opportunity caused by China's industrial structure transformation, those high-tech and high-growth industries will definitely be in hot pursuit of the capital market. Therefore the study of risk control for venture capital becomes more necessary and timely.This paper mainly discusses the strategy in risk control of business investment. Firstly it illustrates the process of operation of venture capital and its characteristics, which describes the basic characteristic of venture capital as an equity capital. The paper discusses the proper elements in rising risks during the process of investment including the existence of policy risk, business risk and financial risk based on the illustration of basic concepts in detail. The cases in this paper are mainly the "three high and five new" projects popular among the institutional investors. The fifth chapter completely discusses every step in the process of the investment involved with project approval, full research and the project implementation based on the analysis of the case of PN-generation technology" project. In addition, this chapter also describes the operation process of the venture capital focused on the practical case, illustrating the risk points needed to be strictly controlled in the process of investment and the related strategies. Besides it also analyses the value of "PN-generation technolog" project by taking techniques of measurement. Lastly it draws a feasible conclusion of the project through the risk analysis in the process of investment probably arisen from some factors like market factors, technical factors, and economic factors etc.Finally, the paper draws some relevant conclusions of the venture capital based on the analysis of the preceding chapters. Besides it also discusses the problem of the way the government as the main institution-building involves in the process of the system building of the venture capital and gives some advices on how to healthily develop the venture capital investment based on the present status of venture capital in our country with reference to the advanced experience of foreign countries.