The Research Of Double Principal-agent Of Venture Capital

It is the main driving force of the development of high-tech industries. There are three factors in the venture investment: venture investor, venture capitalist and entrepreneur. The whole process of risk investment could be seen as dual Principal-Agent relationships, which form the first between investors and venture capitalists as well as the second between venture capitalist and entrepreneur. With the dual principal-agent mechanism , the high-risk venture capital, professional technology and other reasons led to serious information asymmetry between principal and agent and further made agency problem prominent. Therefore, this paper aims at studying the importance of venture capitalist in the process of double principal-agent as the main target, and respectively establishes single and dual venture capital model by means of studying moral hazard and incentive problems. This thesis mainly focus on studying how to sole the problem of dual principal-agent, for example,to reduce agent cost, solve the moral hazard and improve the level of effort and other issues.Firstly, this paper based on the model of Mirrlees and Holmstrom, it constructs single and dual venture capitalist model and analyses in both models the venture capitalists and entrepreneurs in the information asymmetry and the risk has paid in advance the optimal effort level and the proportion of compensation payments, further analyses incentives and venture capitalists, entrepreneur and capacity factors on the result of equilibrium.Secondly, by comparing optional effort level and balanced the proportion of payments of remuneration of the two models, emphasizing the superiority of the double agent, we discussed venture capitalists' important role in venture capital and answered the question-- why venture capital had a double agent.