Why does this happen? Why are private capital entities unwilling to enter the field of venture capital that is already beneficial to the country? Regarding this issue, we interviewed a large number of relevant people from all walks of life, and all of them expressed their true feelings in three words: Don’t worry! Therefore, China's 6 trillion residents' savings are still rarely invested in high-tech startups after the government has repeatedly cut interest rates. A large number of insurance, pension and other funds have not yet launched venture capital businesses, and a number of government-led funds have been successively formed in various places. The investor's venture capital company or fund is not only small in scale, but also has a single source channel, and the risks are excessively concentrated in the national finance. This not only violates the efficiency principle of market operation, but naturally cannot play a good role in high-tech industrialization. and leading role. Some use loans instead of equity investment to operate funds, causing venture capital investment to become distorted and deformed. Others operate in violation of regulations, causing undue mistakes and waste, and even tarnishing the reputation of venture capital. In addition, laws to protect investment Unfavorable factors such as a poor environment and lack of integrity system make private capital entities even more uneasy. What's the problem? After conducting in-depth and extensive investigation and research, we believe that the main reason for our unease is that there is no operational guarantee mechanism. As the famous economist Wu Jinglian pointed out: Many people currently have misunderstandings about the difficulty of setting up venture capital, thinking that the crux of the problem is that the government does not spend enough money. In fact, the key to the problem is not to have an investment, but to rely on what kind of system to make the investment. Venture capital is characterized by high risks and high returns. If the institutional arrangements of venture capital cannot guarantee the personal responsibilities and benefits of specific operators, it will be difficult to achieve success. However, it is regrettable that our institutional arrangements cannot well guarantee the personal responsibilities and benefits of specific operators. At present, most of our venture capital institutions adopt the form of joint-stock companies. This form of enterprise organization itself has insurmountable shortcomings and has been exposed to be unable to adapt to the objective requirements of venture capital. The main problem is that the restraint mechanism is insufficient and it is difficult to prevent moral hazard. A common phenomenon is that senior executives engaged in venture capital, that is, specific operators, are mostly based on administrative appointments and are not selected in market competition. They lack professional knowledge and experience in venture capital and generally increase management costs. , increase corporate costs, engage in related transactions, reduce company profits and other uneasy issues. Since the company is controlled by insiders such as senior executives, the board of supervisors and other departments have become ineffective; although the company law stipulates that resolutions of shareholders’ meetings and board of directors violate the law , administrative regulations, if the legitimate rights and interests of shareholders are infringed, the shareholders have the right to file a lawsuit with the court to request the cessation of illegal acts and infringements. However, for directors who infringe on the interests of the company, can shareholders sue on their behalf? Can shareholders demand compensation, and from whom, etc. There are no provisions in the Company Law, which means that the shareholder litigation system is very imperfect. At the same time, the incentive mechanism is insufficient and senior executives are not motivated. If the venture capital decision is successful, the company's high returns will not be closely related to the senior managers; if the venture capital decision is failed, the personal responsibility of the senior managers will not be serious. For private capital entities, it is hoped that the specific operators, that is, venture capitalists, can bear unlimited joint and several liability, thereby strengthening their responsibilities, weakening agency problems, and making venture capitalists equivalent to the partners of general partnerships. For private capital entities, , and also hope to exempt themselves from joint and several liability when business fails and creditors come to visit, reduce investment risks, and make themselves equivalent to investors in joint-stock companies. The only new form of business organization that can turn this desire into reality is the limited partnership, which combines the advantages of a general partnership and a limited liability company. The so-called limited partnership refers to a partnership form composed of general partners who manage partnership affairs and bear unlimited liability for partnership debts, and limited partners who do not participate in the management of partnership affairs but bear limited liability for partnership debts with their capital contributions. Limited partnership is the organizational form of venture capital institutions. This institutional arrangement and design can not only ensure the personal responsibilities and profits of specific operators, meet the inherent needs of venture capital, but also promote the improvement and perfection of the venture capital mechanism, making it a benign , standardized and sustainable development track. First, limited partnerships can solve the core problems of venture capital institutions through flexible contract design arrangements.

The agency problem arises from the information asymmetry between private capital subjects and venture capitalists. That is, after private capital subjects invest funds, they cannot intervene in business management, and it is difficult to ensure the loyalty and prudence of specific operators; for the business performance of venture capitalists , if you do well, you should have high returns, if you do poorly, you will have to bear corresponding risks, fully embodying the principle of matching risks and returns; specific operators should invest carefully, not take excessively high inappropriate risks, and try to prevent and reduce risk. Among these problems, the agency problem caused by information asymmetry is the most difficult core problem for venture capital institutions and is the core of the core problem. Limited partnerships can solve the above problems through flexible contract arrangements and designs. Such as stipulating capital contributions by general partners, income distribution, accounting policies, agreements on conflicts of interest, advisory committees, etc., to establish an effective governance mechanism that coordinates constraints and incentives to ensure that limited partnership investment institutions can operate safely and efficiently. Second, limited partnership is the perfect combination of entrepreneurial capital and human capital. my country's private capital entities have a large amount of idle capital. These capitals are eager to find suitable ways to add value. However, due to the inefficiency of their own investment and financial management and low investment returns, they turn to expert investment under the highly divided labor and survival of the fittest mechanism of the market economy. Institutions help with financial management. Their requirement is that investing money is not a problem, and they do not need to participate in operation and management, but they must have priority in the distribution of profits, bear limited liability with the investment promised to the venture capital institution, and control risks within the foreseeable range. On the other hand, experts from venture capital institutions usually have industry and technical expertise, high-level management experience, proficient financial knowledge, and close connections with the industrial and commercial financial circles. Most of them are transformed from senior managers of companies or managers of financial investment institutions. Come. The requirements of venture capitalists are to invest a small amount of money, usually 1% of the capital, mainly in human capital, to obtain a relatively high return, usually 20% of after-tax profits, and to be able to use knowledge and experience to exert their own value and engage in discovery. To fully realize the value of human capital in matters such as opportunities, organizational operations, and investment decisions, we must also rely on the organizational form of limited partnership. The two are perfectly combined, that is, the rich provide money, and the talented provide talents. Private capital entities are limited partners, venture capital experts are general partners with unlimited liability, and limited partners are the main suppliers of limited partnership funds. In essence, private capital entities determine the composition and existence of limited partnership venture capital institutions, and decide Venture capitalists are the choices of general partners. For venture capitalists, his past qualifications and reputation represent the value of his human capital. The richer the qualifications and reputation of an investment expert, the more capital he can raise, and the number of entrepreneurial enterprises he can manage will be related to the responsibilities he holds. The more directors there are, at the same time, their credibility itself is also an asset. He will try his best to spend time and energy to maintain his credibility, otherwise he will be eliminated by the market. As a private capital entity, in order to maximize profits and minimize risks, investment experts with good qualifications and reputation will be selected as general partners of limited partnerships. Limited partnership has a unique institutional charm in the development of venture capital. It not only reduces investors' risks and encourages private capital entities to actively invest, but also improves the credibility of venture capital institutions and strengthens the responsibilities of specific operators. Herenhe function also solves the thorny agency problems in venture capital institutions through flexible partnership contract arrangements and designs, establishes a governance mechanism with coordinated incentives and constraints, and also solves the common tax burden of joint-stock venture capital institutions to a certain extent. Overweight and a series of other issues. Therefore, in order to change the current shortcomings of venture capital institutions and allow private capital entities to enter the field of venture capital with confidence, it is a very necessary choice to establish an enterprise organizational form based on limited partnership. Of course, there are no provisions for limited partnerships in my country’s current laws, and the Company Law does not provide for joint ventures with limited liability and unlimited liability. Current laws such as the General Principles of Civil Law and the Partnership Enterprise Law are adopted by venture capital institutions. There are legal obstacles to limited partnerships, but many regions have kept pace with the times and engaged in system innovation in local government regulations to encourage venture capital. They have already broken through the constraints of existing laws and have clarified the legality of limited partnerships as a form of enterprise organization. , and this problem of conflict of validity within laws and regulations exists objectively in our country, and it remains to be eliminated as soon as possible by relevant state agencies in accordance with the Legislation Law. Because a complete legal system, a trustworthy system that is conducive to investment, and a legal environment are necessary conditions for the development of venture capital.

In short, there are many unfavorable factors that make private capital entities uneasy and restrict the development of venture capital. However, we believe that the main problem is to establish and improve the operation guarantee mechanism of venture capital, promote technological innovation through institutional innovation, and rejuvenate the country through science and technology. To improve the overall quality of the national economy and comprehensive national strength to achieve leapfrog development. April 22, 2002