Venture Capital Cycle, Opportunities, and Challenges in China

Abstract

The venture capital industry in China has been developing rapidly since the early 1990s and venture capital has been playing a more and more important role in the development of small and medium-sized businesses, particularly those in the high-tech industry. The authorities recently adopted more flexible regulations to encourage the development of domestic venture capital and inflows of foreign venture capital funds. This article documents the changes in regulatory framework, discusses the three stages of venture capital cycle in China--fund-raising, disbursement, and exit--and analyzes the opportunities and challenges existing in China's venture capital industry.