Venture Capital System Innovation Theory: A Review of the Venture Capital Paradigm: A Review of the "Venture Capital" Paradigm

Author: Liu Jianjun
Publisher:
Publish Date: 2004-06-01
Features: Supported by the First Prize of China Postdoctoral Fund, Final Outcome of the Project; Teaching Reference Book of the Peking University Venture Capital Research Center! "Venture Capital," in its essence, is a form of "institutional innovation in investment supporting entrepreneurship." The "Venture Capital System" refers to the sum of various institutional arrangements related to venture capital and their interrelationships. Based on an examination of the entire process of the evolution of the concept of venture capital, this book redefines the essence of venture capital, clarifying misunderstandings caused by the colloquial term "venture capital" leading to literal interpretations. From perspectives such as "the drive of entrepreneurial needs," "institutional innovation in investment supporting entrepreneurship," and "capital operations associated with entrepreneurship," it reveals the origin of venture capital, the institutional innovation advantages of venture capital over traditional investments, and the intrinsic mechanisms of venture capital operations, thereby overcoming the one-sidedness of simply understanding venture capital from the risk attribute. Using comparative legal methods, it systematically discusses the applicability of trust systems, limited partnership systems, and corporate systems to venture capital funds, avoiding the "limited partnership" caused by the "risk investment" paradigm linking the high-risk nature of "risk investment" with the "general partners bear joint and several liability" mechanism of limited partnerships. Grounded in the "entrepreneurship" foundation, it systematically analyzes the interrelationships between venture capital and relevant institutional systems, proposing a general theoretical framework for the venture capital system, thereby improving the situation where the "risk investment" paradigm establishes the "risk investment system" on the abstract assumption of "high risk, high return" but remains detached from the realistic "entrepreneurship" foundation for a long time.