Corporate Governance, Stock Market and VC-法搜-中国法律信息搜索网

　　This paper consists of 7 sections. Section 2 answers why VC needs to exit. Section 3 lists the methods for VC to exit. Section 4 outlines corporate governance of investee companies and the features of contract between VC and Entrepreneur. Section 5 analyses the importance of IPO to venture capital. Section 6 points out to go public in another countries'' stock market is an alternative way to bolter VC industry. Section 7 makes a brief summery.
　　The reasoning to the conclusion is as follows: The exit is of great importance to venture capital funds. There are implicit and explicit contractual arrangements both between venture capital funds and their investors, and between venture capital funds and entrepreneurs. A successful start-up through an IPO allows venture capitalists to enter into implicit contracts with entrepreneurs concerning future control of startup firms, in a way not available in a bank-centered capital market. The exit of venture capital through an IPO permits such arrangements to be realized.
　　Therefore, greater success of venture capital take place in countries with stock market-centered capital markets.
　　II. Why does the venture capital funds need to exit
　　In order to understand the link between the stock market and the　VC market, we should first analyse why the VC choose to exit from an IPO startup instead of becoming a long-term investor.
　　The main risk faced by investors and venture capitalists is the risk of not getting their money back. Thus, a viable exit mechanism is extremely important to the development of a VC industry. Before venture capitalists invest, they plans exit. An obvious fact is that, conventional limited partnership agreements between venture capital funds and capital providers　typically sets a maximum 7-10 year term for the partnership, after which the partnership must be liquidated and the proceeds distributed to the limited partners. During this term, the proceeds from investments in particular firms are distributed to limited partners as realized.