Venture Capital in China: Improving the Legal Framework on the Basis of the U.S. Experience.

摘要

Venture capital (VC) is the investment by a financial firm in high-growth, high-risk, and high-tech private start-ups for high returns in the future. Since the importance of VC for the high technology sector and the economy as a whole has been widely accepted in China, it follows that a successful VC industry is an important tool for China to further develop and strengthen its economy and high technology industry. A well designed legal system will attract more investors to engage in China's VC industry, while a poorly designed legal regime will throw obstacles in the way of investments for the industry. This study offers evidence on how a proper legal framework may be established for China's VC industry.;The main problems of China's VC legal system include those of fundraising, overly complex foreign VC investment restrictions, limited exit channels, and ineffective governmental stimulus. In an attempt to solve these problems, this study examines six key factors that influence the nature and performance of a proper VC legal framework. These factors include the formation and fundraising of VC firms, the usual life cycle of VC investment, the impact of economic and political policy on VC development, the governance of ventures, an established financial market, and governmental VC stimulus.;Since the future of China's VC industry is likely follow the model presented by the VC industry in the U.S., which is seen by most commentators as the best VC industry in the world, China should study the important lessons learned in the century of VC legal experiences in the U.S. This study compares the Chinese VC legal system with that of the U.S. in four aspects: funding, governance in ventures, exits, and stimulus.;Although China's legal and policy environment for the VC industry is improving, Chinese policy makers who wish to promote the VC in China need to increase the regulatory supply of and legal demand for VC. Against the background of this study of the experiences of the U.S. VC industry, it becomes clear that some VC legal techniques employed in the U.S. should be adopted in China. Based on the lessons learned in the U.S., China should improve its financial liberalization, create new legal techniques for VC governance in ventures, promote its exit channels, and provide a proper stimulus policy.