Research On Due Diligence Investigation System Of Equity Venture Capital In Primary Market

The primary market equity venture capital(VC)has been in China’s market for more than 20 years.Since foreign private equity investment entered China’s market in the 1990s,the development of the capital market has been ups and downs,with continuous upsurge.China has become the second largest equity investment market in the world.Due diligence investigation,also known as Prudential investigation,is one of the important work links in financial and industrial investment and financing economic activities,and is the necessary basic work for ultimately forming investment or M&A decisions.Equity venture capital has become an important financing tool and means in China,but there are also problems of uneven project quality.Some companies even use information asymmetry to induce equity investment institutions to make blind decisions by deception,which leads to investment risks.How to establish a scientific,efficient and effective due diligence system for investment institutions,which can not only fully discover enterprise value but also rationally and objectively identify risks,is the main problem and difficulty faced by investment institutions.Based on the literature research and review of due diligence,this paper starts from the definition of due diligence,the four basic principles and the category of due diligence.In the due diligence research of equity venture capital in the primary market,first of all,it does the systematic construction of the underlying theory and tamps the theoretical system.On the basis of traditional financial fraud and evaluation theory,it integrates enterprise management such as strategic matrix,industry cycle theory Core competitiveness model theory and other theories,and construct the topology of the underlying theory.In the research part of guiding principles,according to the characteristics of first-class equity venture capital,the paper expounds and demonstrates that two guiding principles of value discovery and logical demonstration should be added.For the research of due diligence methods and tools,this paper mainly introduces information management theories such as subject information feedback,deviation correction and prediction to optimize,and demonstrates that the due diligence information management ability can be improved from three directions:building information sensors,core CPU and computing power support system.In the part of due diligence evaluation,this paper uses the analytic hierarchy process(AHP)to build a model,which is divided into two categories:investment value evaluation Ⅳ and investment risk evaluation IR.The criteria and indicators of investment value assessment Ⅳ include 6 categories of criteria and 21 specific indicators,including industry background,market value creation,technology and products,business model,team evaluation,and financial benefits.The criteria and indicators of investment risk assessment(IR)include 5 categories of criteria and 16 specific indicators,including industry risk,financial risk,operational risk,technical risk and governance risk.Further,this paper applies the new due diligence system theory and methodology to the due diligence practice of specific fxkj investment projects,presenting the similarities and differences between the new system due diligence and the traditional due diligence,and presenting the practical significance of the research.The research found that through the systematic research on the integrity of the due diligence system,it can effectively help investment institutions to reasonably set up due diligence organizations,optimize due diligence methods and tools,be more conducive to the realization of the two objectives of value discovery and risk assessment of equity venture capital,and better solve the problem that the current primary market equity investment institutions generally lack comprehensive and systematic decision-making basis.Finally,this paper puts forward suggestions on the due diligence work of investment institutions,mainly from three aspects of building and improving the due diligence sensor system,core CPU system and computing power support system of investment institutions,and especially points out that investment institutions should adhere to industrial research work and improve technical insight ability for a long time,so as to effectively improve the ability of due diligence to actively discover value,risk assessment and logical demonstration.