There are more than ten forms of venture capital organizations around the world. According to their legal system and structural characteristics, they can be divided into two types: corporate system and limited partnership system. Company system is the earliest form of venture capital organization.
The American Research and Development Corporation (ARD), the world's first modern venture capital institution, was established in p>1946, and the small company venture capital institution (SBICS) was established in 1958, as well as venture capital branches and subsidiaries of many consortia and venture capital institutions affiliated to banks.
A company-based venture capital institution refers to a limited liability company or a joint stock limited company that raises equity by issuing shares to the public in a targeted manner according to the company law, and forms a company specializing in the investment management function of venture capital. The main feature of the company system is that the organizational form of the enterprise is a limited liability company or a joint stock limited company, and the articles of association and the company law regulate all parties. The fund-raising is basically carried out in accordance with the way and procedures for the joint stock company to raise capital by issuing shares, and investors are limited to the amount of their capital contribution. The company system consists of a shareholders' meeting, a board of directors, a manager and a board of supervisors. The powers and responsibilities of each institution are determined, and they perform their duties, which not only cooperate with each other, coordinate with each other, but also check and balance each other. The governance structure of corporate venture capital institutions is very similar to that of ordinary companies.
another structure of corporate system is the form of "fund company+fund management company", that is, investors invest to set up fund companies, and at the same time, professional investment teams set up fund management companies, and the fund companies entrust all or part of their funds to fund management companies for investment to obtain income. Fund companies only undertake limited liability to the extent of their entrusted funds and do not participate in specific investment business activities; The fund management company is responsible for the specific operation of the entrusted funds, charging a certain management fee every year, and sharing the investment income with the fund company according to the agreed distribution ratio. Fund management companies bear the losses and risk liabilities that may arise from venture capital activities with their own capital. Fund companies and fund management companies are independent legal persons, and both companies need to pay income tax separately when distributing investment income. Limited partnership venture capital institutions originated in Silicon Valley of the United States. It is a kind of partnership company, which consists of two types of partners: one is the general partner (GP), who is an experienced venture capital manager, is responsible for the operation of the company's funds, and is the operator, who takes unlimited responsibility for the company's operational risks, and only symbolically invests a small amount of capital (usually 1% of the total capital), and generally gets 2% of the partnership company's net profit; The other is the Limited Partner (LP), which is the main provider of venture capital for the partnership company. It is responsible for the funds needed for venture capital investment, generally accounting for 99% of the total capital, but it does not participate in the operation and management of funds, only plays a supervisory role, and assumes limited liability to the partnership company within the scope of capital contribution.
The venture capital fund is formed by the capital of the two companies, which does not have the legal person qualification. The fund manager (venture capitalist) acts as the general partner, and other investors act as the limited partner.
the main bodies of limited partnership are fund investors, fund custodians and fund managers. Fund investors can obtain fund beneficiary certificates by subscribing for the shares of venture capital funds issued by fund managers. Investors can attend the fund investors' meeting (or limited partner meeting) and participate in the fund management board (or fund advisory Committee). The fund custodian shall perform the duties of safe custody of the fund assets, and be responsible for the specific account management and clearing and settlement business of the fund investment operation. The fund manager (venture capitalist) is the core of the operation of the limited partnership system. It subscribes for 1% of the fund shares, acts as a general partner, performs the business functions of investment management on behalf of fund investors, and is responsible for the investment decision-making of venture capital, project equity management after investment, liquidation and withdrawal, etc., and assumes unlimited responsibilities for the fund. As the representative of investors' interests, the fund management board is the highest authority for venture capital decision-making, which usually consists of three parts: representatives of fund investors, fund managers and external experts.
compared with the corporate system, the limited partnership venture capital institutions have the following institutional advantages:
(1) low operating costs.
As a limited partnership enterprise does not have the qualification of a legal person, it is not required to pay corporate income tax, and only the partners need to pay taxes separately according to the nature of the original taxpayer, thus avoiding the problem of double taxation in the corporate system. In addition, the daily management expenses of limited partnership venture capital institutions are relatively fixed. Because the income of general partners mainly comes from capital appreciation commissions, their daily management expenses are also limited in a fixed proportion, and general partners generally do not blindly invest in order to obtain more management fees. Therefore, on the whole, the operating cost of limited partnership is low.
(2) A good explicit incentive mechanism can greatly weaken the moral hazard of venture capitalists.
under the limited partnership system, the venture capital fund management company and its partners are entrusted to manage the whole fund by virtue of their market reputation. As general partners, they have unlimited responsibilities for the fund because they actually control the specific operation of the whole fund, and they have strong responsibility constraints, so they can truly fulfill their fiduciary obligations and responsibilities for the fund operation; As a general partner, venture capitalists generally invest 1% of their capital. Although the proportion is small, it may not be a small amount for venture capitalists, so it can play a good role in restraining venture capitalists. In addition to charging investors a fixed management fee of about 2% as labor compensation, venture capitalists can also get 2% of the net profit when the fund is profitable for income distribution, and their 1% investment share can get more than 2 times of high leverage ratio. This efficient incentive mechanism realizes the unity of ownership and control, and links the income of venture capitalists with the risks they take, which greatly reduces the information asymmetry and principal-agent cost, and can effectively curb the moral hazard behavior of venture capitalists.
(3) The special "separation mechanism" shows the ability of venture capitalists and can reduce the transaction cost in the process of venture capital financing. There is a high degree of information asymmetry in the process of venture capital investment, but the practice of general partner's contribution of 1% in limited partnership system actually provides a "separation mechanism", that is, venture capitalists are willing to use 1% of their contribution as "mortgage", which shows the ability of venture capitalists, thus greatly reducing the transaction cost in the negotiation process of venture capital financing.
(D) The short operation time has a strong binding force on venture capitalists.
like ordinary joint-stock companies, venture capital institutions with corporate system are permanent unless they are liquidated, bankrupt or merged according to the provisions of the company law. It is through the company's internal articles of association and external contracts to achieve the entrustment and checks and balances of the parties to venture capital. The limited partnership venture capital fund is established and operated according to trust deed, and its operation will be terminated at the expiration of the contract period (usually 5-1 years). The fund has no legal person status, but because of the independence of trust property, the fund has become an independent legal subject only for trust purposes. It constructs the principal-agent and mutual checks and balances mechanism between the parties through a trust deed, which can form a strong restraint mechanism for venture capitalists.