Learning Process in Venture Capital and Underinvestment

摘要

Investing is the process of learning about the situation of the R&D project,renewing the belief to the success probability of the R&D project.Due to the trust issue,the venture capitalist tends to be underinvestment.In order to alleviate this problem,a certain amount of shares should be allocated to entrepreneurs.This article analyzes the relationship between shares allocated to entrepreneur and the value of the firm.We conclude that proper shares will increase the value of the finn,however too much shares will decrease the value of the firm.