An Analysis on the Management Mode of Government Venture Capital Leading Funds

Government venture capital leading funds act as fund of funds or gatekeepers with a policy goal to attract private capital financing small and medium enterprises. Compared with that of private venture capital funds, government venture capital leading funds are in an environment with less asymmetric information and therefore their rates of return are less uncertain. With a policy task to induce private capital funding small and medium enterprises, government venture capital leading funds have motives and capabilities to maximize their profits. Professional and standardized investment procedures facilitate the management of government venture capital leading funds. However, lacking efficient evaluation criteria and ownership in essence makes government venture capital leading funds unfit to be managed fully by government department or state-owned enterprise. Entrusting qualified private management companies to undertake their day-to-day management and operating affairs, government venture capital leading funds may be able to guarantee a prospective development in the long run.