The exit mechanism of venture capital, with an example. 5

The factors influencing the exit mechanism of venture capital in China are as follows:

1) Financial systemThe financial system can be divided into two categories: the market-led financial system and the bank-led financial system. For example, the United States is a typical country with a market-led financial system, and the United States has a mature and perfect market, which creates conditions for the exit of venture capital.

In the ** market, venture entrepreneurs can regain control of the company from venture capitalists through initial public listing, thus forming incentives for venture entrepreneurs; At the same time, venture capitalists can not only realize benefits through initial public offerings, but also establish their own good image and reputation. At present, China's financial system is not suitable for the further development of venture capital, and it is necessary to combine domestic reality and foreign experience to establish a financial system that is in line with the development of China's venture capital, so as to effectively promote the development of China's venture capital industry.

2) The present value of the future earnings of the venture companyGenerally speaking, it is feasible to exit the venture only when the present value of the future earnings of the venture exceeds the cost of the exit method. That is, if the venture capitalist prefers to exit by initial public listing, the present value of the future earnings of the venture company must exceed the cost of the market to be feasible, otherwise other exit methods can only be adopted.

3) The use of IPO withdrawal of the control of the venture enterprise will weaken the dilution control of the shares held by the venture capitalist, and the corresponding venture entrepreneur will gain more control; However, exit methods such as mergers and acquisitions and mergers and acquisitions are not conducive to the exercise of control over the enterprise by venture entrepreneurs, and it is easy to cause conflicts of interest between venture entrepreneurs and venture capitalists.

4) The ability of the new equity purchaser to solve the information asymmetry When the venture capital exits, there is a relatively obvious information asymmetry between the internal investor and the external investor, which is manifested in the fact that the internal investor has more real information about the venture enterprise, while the new equity purchaser relies on the information disclosure of the venture enterprise. Therefore, the ability of new equity buyers to solve the problem of information asymmetry will affect the choice of exit method of venture capitalists. For equity buyers, they are always willing to choose the exit method that is more difficult for equity buyers to solve the problem of information asymmetry.

5) The degree of economic prosperity risk capitalists will choose different exit methods with the different degrees of economic prosperity, when the economy is in a prosperous period, the market is abundant, investor confidence is enhanced, and the proportion of venture capitalists who choose the initial public listing exit method increases, and the success rate is also high; In times of recession, the proportion of venture capitalists opting for other ways to exit increases, while the proportion of IPOs exiting decreases.

The main ways to exit venture capital are:

1. M&A exit.

M&A exit refers to the exit of venture capital through the merger or acquisition of venture companies by other enterprises;

2. Repurchase withdrawal.

Repurchase and exit refers to the repurchase of shares in the hands of investors through the management of venture entrepreneurs or venture enterprises, so that the wind and sail insurance capital can be withdrawn.

3. Initial Public Offering (IPO).

Initial public listing exit refers to the exit of venture capital through the listing of venture companies. and missing.

4. Equity transfer withdrawal.

Equity transfer exit is the exit of risk capital by way of equity transfer. Equity transfer refers to the civil legal act in which the shareholders of the company transfer their shares to others in accordance with the law, so that others become shareholders of the company.

Individual Investor Transfers.

On the premise that the investor has invested in the project for one year and has found a suitable equity transferee, the equity transfer procedures can be handled by WeInvestment, and we will charge a certain fee;

Limited Partnership Collective Transfer.

For the collective transfer of a limited partnership, the investment manager will work with the entrepreneur and investor to find a suitable equity transferee (VC PE institution, strategic investment institution, strategic M&A institution, over-the-counter market, ** market, etc.).

5. Liquidation and withdrawal.

Liquidation hail exit is a way to exit a failed investment. Venture capital is a very risky investment behavior with a fairly high failure rate. For investors, once the venture company they invest in fails, they have to exit in this way.

In today's investment market, the risk is huge, if you are an investor, you should understand a series of knowledge and information about investment, lay a solid foundation for your investment, and try to avoid some unnecessary risks.

1. The so-called venture capital, according to the definition of the National Venture Capital Association, refers to a kind of equity capital invested by professional financiers in emerging, rapidly developing enterprises with huge competitive potential.

2. Venture capital can also be understood as a dynamic and cyclical process. Venture capitalists actively participate in the management and operation of venture companies or venture projects with their own professional knowledge and practical experience in related industries or industries, combined with efficient corporate management skills and financial expertise, until the venture companies or venture projects are publicly traded or realized through mergers and acquisitions to achieve capital appreciation and capital liquidity. After a round of venture capital investment is exited, the capital will be invested in the next selected venture company or venture defense project, and so on, and the cycle will continue to increase in risk capital.

The so-called venture capital exit refers to the fact that after the venture capital development has reached a certain stage, the venture investor believes that it is necessary to withdraw the risk capital from the venture enterprise, so it chooses a certain way (public listing, ** or repurchase, liquidation) to withdraw the risk capital through the capital market, in order to achieve capital appreciation or reduce losses, and prepare for the next project. High returns are achieved through the successful exit of venture capital, and a viable exit mechanism is the key to the success of risk-borne investment.