Venture Capital Governance and Management: Evidence from China

Based on the latest research of neo-institutional economics, game theory is applied systemically in this paper to discuss all stages of venture capital governance. It is necessary and possible for the venture capitalist to participate in the management of the venture-backed firm, which contains the strategic, financing, and operation management, etc. A longer venture capitalist's participation in a firm may increase its value while also increasing costs for the venture capitalist. After deeply investigating the venture capitalist's active and the enterpriser's choices involved, we set up the static and dynamic models to analyze how their activities impact on each other and what the equilibrium result is. In conclusion, we study the real situation in China and the factors that impact the equilibrium result and put forward some proposals.