The Influence Of Venture Capital Competition On The Successful Exit Of Investment Institutions

Real entrepreneurship can be called innovation.The so-called innovation is to improve the production efficiency as much as possible above the original technical level,while innovation is a leap in the technical level.Enterprises with innovation ability will show their unique advantages when targeting enterprises with only innovative ability,occupying the market at the fastest speed and replacing old things.Venture capital institutions refer to investment institutions specializing in venture capital business.Through their professional identification and judgment ability,venture capital institutions select startups with innovative ability and high growth potential from a large number of entrepreneurial projects,and inject venture capital.Earn high returns by acquiring equity in companies with disruptive technologies and groundbreaking potential.For the invested enterprise,the venture capital institution can not only inject a large amount of liquidity into it,but also bring rich social resources,indicating that the investment institution recognizes the enterprise,which can improve its reputation in the capital market and facilitate its further development.Carry out financing activities,improve the quality of operation and management of the invested enterprises,and promote the healthy development of enterprises.However,with the gradual expansion of the venture capital markets,investment institutions have also shown a mixed situation.The emergence of this problem will reduce the efficiency of resource allocation to a certain extent and is not conducive to the full use of social capitals.In this context,this paper studied the impact of the venture capital market size on the exit status of investment institutions,and deeply explored various factors that affect the exit status.Taking investment events from 2001 to 2021 as a sample,this paper used the method of multiple regression to analyze the impact of investment institutions with different reputations and backgrounds.We found that the exit status of investment institutions and the IRR do not follow the growth of the venture capital market.The specific conclusions are as follows:(1)No matter what method is used to measure the degree of competition in the equity market,it will eventually be found that with the increasing competition pressure in the market,the exit rate and the successful exit rate of the market continue to decline;(2)Overall From the perspective of investment institutions with good reputation,the exit situation is not as good as that of investment institutions with poor reputation;(3)the exit situation of investment institutions with good reputation has little correlation with the degree of market competition,and the exit situation of investment institutions with poor reputation has a negative impact on the degree of market competition.(4)The exit situation of investment institutions backed by foreign capital is better than that of local institutions;(5)The later financing rounds and investment extremes,the lower the uncertainty,and the more likely they are to successfully exit;(6)Shareholding The higher the ratio,the more likely it is to successfully exit,but it should be noted that too high a shareholding ratio will inhibit the company’s innovation ability.The above conclusions are also applicable to the research on the internal rate of return.The degree of market competition reduces the IRR.Investment institutions with foreign investment also have relatively high internal rates of return,and investment institutions with better reputation will also have higher internal rates of return and similar conclusions of investment institutions with poor reputation,and put forward relevant suggestions for the research conclusions.This paper innovatively changes the research object and perspective.By using the two dimensions of market size and the number of investment institutions to analyze the competition state of the investment market,it is concluded that the more intense market competition,the lower the successful exit rate of investment institutions and the lower internal rate of return.And then,we explored the reasons for this phenomenon:the intensity of competition may have prompted investment institutions to reduce the high-standard review of investment project quality and perfect post-investment services;the country’s successive launch of entrepreneurial policies may give some startups with insufficient innovation.Enterprises have the opportunity to fish in troubled waters,and put forward targeted suggestions for different relevant subjects according to the above phenomena,which enriched the research content in related fields.