On the Venture Capital Economic Role of Government

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On the Venture Capital Economic Role of Government in other papers

[Abstract] Governments in the venture capital plays an important role, and some indirect guidance, some directly involved, and some both in and guidance. And our government can only be directly involved in the first, then indirect guidance. [Key words] risk investment; government behavior; Role to promote high-tech venture investment as a venture capital industry is highly connected bridge between technology and capital markets, in the high-tech industry, plays an irreplaceable role. To this end,[link widoczny dla zalogowanych], governments formulated a series of preferential policies to give strong support. At present, our government Although high degree of attention to venture capital, but in development planning, policy development and regulatory construction, is still in its early stages. China's economy from a planned to a market economy in developing countries, government investment in the risk of what role, is essential. It is necessary in the analysis, based on the experience from abroad, combined with China's national conditions, the right to establish our government's role in venture capital. First, governments of developed countries in the development of venture investment Role Throughout the Western developed countries, the emergence and development of risk investment, largely thanks to the Government's active participation and strong support. However, due to the national situation, the Government act as the role of venture capital are not the same. Summed up the following modes: (a) of the indirect guidance of the rarely directly involved in the venture capital management, and is committed to venture capital operations, providing policy guidance and support, improving the external environment for venture capital and reduce their risk factors. Because of these policies and the environment, the scale of the U.S. venture capital, miraculously expand and eventually become U.S. economy, the rapid development of one of the reasons. Specifically in the following areas: 1. Accommodative policy environment. U.S. government investment in basic business risk of non-intervention, and not directly against the risk of investment laws in a number of indirectly related to the law, essentially on venture capital deregulation. In 1979, the U.S. Department of Labor amended the Employee Retirement Income Security Act (ERISA), to allow pension funds to enter the field of high-risk investments, including those engaged in venture capital. This not only pension funds to become the largest source of venture capital, but also the entire venture capital funding levels have greatly improved. In 1980, Congress passed the The risk of patent applications for the enterprise, the Government has streamlined procedures, provide the necessary convenience. This series of deregulation measures, the U.S. private equity market becomes more developed sound. It is in this market basis, before the formation of American-style investment model. Since the 90s of the 20th century, the U.S. government basically did not put a new policy for venture capital. This is actually created for the risk investors a stable, relaxed policy environment, ushered in the current venture capital market, a new round of prosperity. 2. Preferential tax policy. In view of the pursuit of high risk investment return on investment is highly vulnerable to the impact of income level, the U.S. Congress in the Revenue Act of 1978, the capital of VAT from 49.5% to 28% equity investment played an important long-term incentives, so that the amount of venture capital funds in 1979, expanded 10 times over the previous year. The economic recovery in 1981, tax laws, further proliferation of the capital tax from 28% to 20%, the U.S. venture capital in the 20th century, the early 80s, about 46% of annual rate of proliferation. 1978-1994 total U.S. venture capital, soared from $ 4,000,000,000 to $ 35,000,000,000. According to experts, the U.S. investment fund, has reached 5.6 trillion dollars, more than all commercial bank deposits of 4.6 trillion. Visible, government preferential tax policies, venture capital investment to get immediate results. 3. Government guarantees. The U.S. government in 1953, established the Small Business Administration, a commitment to high-tech SMEs, bank loan guarantees. Provided the following loans in the $ 155,000, providing 90% of the secured loan in the 15.5-20 million, providing 85% of the guarantee. In 1993 Congress passed a bill to require banks to venture loans, accounting for 90% of the total investment; risk of bankruptcy if the government is responsible for 90% of compensation, and the right to auction the assets of venture. Subsequently, the U.S. venture capital climax again, the investment far exceeds the level of the 20th century, 80 in 1996, a new injection of venture capital, up to 65 billion U.S. dollars, venture capital rates of return as high as 29.6%, and the venture capital market and the operation matures. However, the U.S. venture capital truly large-scale development after 1997. Funding in 1997 amounted to $ 9,060,000,000, up 15.5% over 1996, the number of 103 venture funds, 13 more than in 1996, the average size of each fund, from $ 77,000,000 in 1996 increased to 8,900 in 1997 million. With this guarantee system, countries can bring a small amount of money a lot of private capital, to invest in risky high-tech enterprises. Therefore, it is known as government-guaranteed system of venture capital amplifier. addition, the U.S. Government has also taken to provide subsidies, pre-purchase contracts signed support policies for the development of risk investment, and create favorable conditions. In particular, in 1982, the United States formulated the implementation, so as to achieve maximum access to high-tech fields to attract venture capital. According to the U.S. the U.S. government that the indirect control of the investment model, both strongly supported the development of venture capital, while maintaining an independent venture capital firm and flexible operation mechanism, to achieve an effective government and the market combination. (b) direct government involvement in the under the influence of venture capital model of development with the United States vary widely. Mainly for the Japanese government directly involved in venture capital, policy, regulation, protection and support of technology venture development, adopt a 1. Direct government investment. The development of venture capital in Japan, behind the United States. To catch up with the United States, the Japanese government directly involved in the venture capital industry, providing financial support, and provide market protection, reducing the risk of business risk, which greatly promoted the development of high-tech industries in Japan. As in the 1976-1979 year, in terms of VLSI overtake the United States, the Japanese government invested heavily, and came forward five largest semiconductor manufacturers, component VLSI Technology Research Group, developed large scale integrated circuits. l980 in Japan six months earlier than the United States developed a 64K dynamic random access memory (DRAM), developed two years earlier than the U.S. 256K memory. 1981 Japanese production of 64K memory, have occupied 70% of the world market, to 1986, the Japanese semiconductor market share accounted for 45.5% of the world, to become the world's largest semiconductor producer. Japanese government-led venture capital model for the post-war Japan revitalization of mechanical and electronic industry, LSI research and so on, played an important role in promoting, is seen as 2. Government continues to control. Achieved dominance in the semiconductor industry, the Japanese continue to follow the government Reason is that in the past In this way, the Government can play the advantages of the reach of civil power, to mobilize resources and follow the directions Jiayi operation, which is easy to be successful. However, when faced with issues of innovation, to explore the unknown, the government is not only responsive, non-governmental organizations as operational efficiency, and excessive government intervention and direct management of enterprises tied to the risk, affecting its activity, suppression of individual creativity play. On the other hand, a large number of government funds involved in venture capital, the use of funds prone to inefficiency and waste in the process. (c) both participate in and guide the , investors fear risk, most of the venture capital support through the national plan to promote the. So, despite the high level of technology in these countries, but the low level of technology commercialization. Thus, the Government venture capital role in the far-reaching significance. 1. The Government, directly or indirectly support the venture. British Government funded the establishment of venture capital institutions directly involved in venture capital. Mainly to help the public sector to obtain patents and licenses, as well as funding support for teachers and students of some promising ideas but not yet confirmed early development, support enterprises in product development and process development, and even help run the new company. In addition, the Government has also taken an indirect support of the policy. Such as the UK Trade and Industry, the government payment of 33% earmarked for the development of new technologies, 20% of development costs to support high-tech industries. In 1981, the British Government formulated the Enterprises was enacted in 1983 expanded program to provide venture capital from individual investors may be tax deductible. In 1998, the British Government announced two incentives: tax breaks to small businesses and key executives of small venture firms shares, giving tax credits to businesses to enable risk managers to attract and retain good. 2. The government will risk investment as an important part of high-tech development. Israeli venture capital late start, but developing rapidly. In 1991, only one Israeli venture capital funds, government funding in 1992, $ 100,000,000, as venture capital start-up capital, set up 10 venture capital funds. The size of each fund is 2000 million U.S. dollars, with a partner set up and operation mode. Among them, the Israeli government holding 40%, private investors holding 60%. The Fund operates primarily by private investors, such as successful, 6 years after the government shares in the Fund's original transfer to other fund investors, the withdrawal of government funding; if the operation fails, the government and investors to bear the loss. Practice shows that this practice of venture capital industry, play a strong role in promoting. A few years later, the Israeli venture capital industry, the fund various types of number and size, have been growing rapidly. The Government will develop venture capital, into the overall development plan, specifically the real purpose of the development of venture capital is to promote high-tech enterprises. This ensures that the direction of development of venture capital, but also ensure that all policies, plans more coordination. 3. Emphasis on human resources development. The Government of Israel believes that the high-tech companies and venture capital, in all resources is the most valuable human resources. The Government attaches great importance to the training and introduction of talents always positive