Venture capital is a form of private equity and a type of financing that investors provide to startup companies and small businesses having the potential of long-term growth. Venture capital generally comes from well-off investors, investment banks and any other financial institutions.
Venture capital in China is an important part of financing. Chinese start-ups account for a large percent of the world’s venture capital funding. The globalization of capital flow has resulted in an increasing number of firms choosing to inter listing and dual listing of their stocks in foreign stock exchanges to raise public equity capital abroad. More recently the thriving of venture capital (VC) inflow to developing nations to finance the start-ups and growth companies in those emerging economies.
Venture capital does not always take a monetary form; it can also be provided in the form of technical or managerial expertise. You will agree that venture capital is typically allocated to small companies with exceptional growth potential, or to companies that have grown quickly and appear poised to continue to expand.
Venture capital can be risky for investors who put up funds however the potential for above-average returns is an attractive payoff. For new companies or ventures that have a limited operating past venture capital investment is increasingly becoming a popular. It is essentially a great source for raising capital, especially if they lack access to capital markets, bank loans or other debt instruments.
The dramatic rise in venture capital investment market in developing nations is largely fuelled by institutional investors in the United States and other developed nations. However among the developing nations, Venture Capital Investment Market and Services in China are experiencing the transition from a central planning regulated economy to a free market economy. It has progressed quickly in grasping these unique funding opportunities to encourage the emergence of innovative enterprises and ensure its relevance in the global economy.
For Chinese investors, the key bets were in non-banking financial companies, wealth management firms, banks, food delivery and e-commerce firms. It is a fact that China was the third highest source of venture capital investments in 2019.
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To know more, you can visit here: China Joint Venture Law