Abstract

Venture capital FOFs sponsored by government is a policy instrument to solve the market failure problem in the field of early-stage enterprises'financing with the government's visible hand. In theory, the design of guide patterns for venture capital FOFs sponsored by government should firstly focus on the risk compensation. From the experience of many other countries, the practical guide patterns mainly include preferential loans, government direct investment, co-investment, holding shares in commercial venture capital funds, investing commercial venture capital FOFs, loan guarantee, capital loss subsidy, management or deal loss subsidy, and so on.

Thus, taking the national law and regulations into account, it is wise for those venture capital FOFs sponsored by our government to adopt co-investment, loan guarantee, investment-inFOFs, subsidies and investment readiness into their guide pattern lists as well as the current pattern of holding shares in commercial venture capital funds. As a result, the problem of capital shortage which those early-stage enterprises are suffering can be solved better.