Research on Risk Avoidance Methods of Venture Capital

Abstract

The situation of domestic and foreign financial markets is turbulent. How to effectively guide residents to make financial investment, improve the quality of financial investment and prevent investment risks is a very important topic. Venture capital is a kind of investment behavior which aims to promote the commercialization of high-tech achievements as soon as possible in order to obtain high capital returns. Venture capitalists should not only invest capital, but also play their long-term accumulated experience and knowledge as equity owners, and use the information network to help enterprise management. This paper studies the avoidance method of risk investment through the analysis of risk investment cases. Through the study of the failure cases of venture capital, it is found that the problems of venture capital mainly appear in the failure of technology commercialization, internal disputes of equity, defects in business model, and fierce competition environment. The study suggests that when using high-tech venture capital, technical research must follow the commercial model. All rules and systems of shareholder cooperation are very important, such as equity distribution, entry conditions, exit mechanism, conflict resolution mechanism, profit distribution, etc. When an enterprise introduces investors or engages in financing, it must design the basic path to control the control of the company. Otherwise, once you lose control of the company, it will be difficult to return. Also, venture capital should have a clear understanding of the business model, keep up with the changing sales environment, and understand people's needs to make venture capital. Moreover, the key factor determining investment success is that investors must consider natural monopoly when looking at macro industries through products