Research Of Financial Support Of Youth Entrepreneurship

As the stringent situation of employment progresses in recent years,our country has realized the significance of developing the pluralism of employment system to provide more employment opportunities.Entrepreneurship has also become another salient choice when the youth graduate from colleges. The State Council of China, President Xi Jinping and Prime Minister Li Keqiang have revealed their philosophy about supporting youth entrepreneurship, which constitutes another economic growth engine.At the present stage, youth entrepreneurship has occupied an important position in some special fields, which in turn proves the potential of youth entrepreneurship. In foreign countries, it’s not hard to collect start-ups which dominate the whole niche market, most of which are high-tech industries. In contrast, we still lack leading youth entrepreneurship which can direct the development of the whole industry.This gap is never isolated from the backing system of financing youth entrepreneurship.In advanced economies, many venture capital earns their reputation by investing in youth entrepreneurship. The dominating channels of financing youth entrepreneurship are venture capitals and online financing platforms.A common routine of growing a youth entrepreneurship works in this way:First the start-up posts its idea on the online financing platforms and its potential customers and investors will donate some money. After collecting enough money to initiate the firm, it will provide trialproducts or services to the public or special groups. Depending on these tryouts, venture capitals will step on the stage to decide whether to finance the start-up in the next period. If the start-up attracts enough money from some venture capital, it will carry on its operation, R&D and production plan. We can conclude that, although youth entrepreneurship bears a high default risk, but through reasonable risk control system and risk pricing models, excellent venture capitals still enjoys a yield much higher than average return of the market. Even in China, the best venture capitals still provide positions for many dollar funds.Commonly, five different channels are provided for youth entrepreneurship financing. They are government support, loans from financial institutions, venture capitals, bond market and online financing platforms. Government support can reach most youth entrepreneurship, and it usually provide general support with little distinction. The help from government usually only functions as the seed money and nearly no entrepreneurship can live a long time by government support. Loans from financial institutions are also far from adequate. This is determined by the conservative risk attitudes of financial institutions of China, which means they are not attracted by financial services for youth entrepreneurship due the high risk. Venture capital plays an important role in supporting youth entrepreneurship’s growth. However, for start-ups who contact with venture capitals, it usually cost a high price to win the finance from venture capitals due to lack of legal support and supervision.Bond market for youth entrepreneurship is very small. If the interest rate restrictions are lifted, it may win more space. Online financing platforms now grow at the vacantness of supervision, cheating scandals are not new to the public in this industry, which hurts the development of the whole market.To deal with such condition, we analyze the different channels offinancing youth entrepreneurship in detail and compare the advantages and disadvantages of them to provide some advice. It’s our collective hope to build a healthy environment to finance youth entrepreneurship at the proper cost.