The Role of Government in Venture Capital Finance: an Economic Analytical Model

Government plays a crucial role in venture capital financing, especially in the early stage of venture capital industry. This paper analyzes the role of government in venture capital financing. I explore a basic model and add the government as a new participant into this economic analytical model. And then, I analyze the government financing guidance in venture investment based on extended model. The results indicate government funding guide can promote the development of venture capital by improving the expectation of venture investors.