Venture capital is carried out in the private sector in the interests of investment. Narrow sense (the definition of the United States), venture capital funds by investors, entrepreneurs and young companies to provide seed, early and development of the funds needed to obtain target company equity, and eventually get high returns. In the broad sense (the definition of Europe), venture capital funds by investors to private (non-listed companies) to provide all the equity funds to get the target company’s shares, and to maximize capital appreciation. Since most venture capital investments in young companies in emerging industries, business startup or early development stage, and even seed (or the concept of), these enterprises need from early to mature through a long-term business development process ( Usually this process takes 3 years -5 years or even 5 years -10 years), so long-term nature of venture capital. And because the investment company is a private, venture capital before the IPO received from the shares of these enterprises have little circulation market, can not reflect the value of these shares, it is difficult to transfer or sell these shares, poor liquidity. At the same time transfer of the shares subject to a number of non-market constraints. Therefore, the main characteristics of venture capital investment cycle is long and poor mobility. However, a few years later once the successful listing of these companies or mergers and acquisitions, venture capital returns will be amazing (usually 5-10 times or even ten times the return). This shows that venture capital is a high risk high return investment, the aim is to maximize the value of capital.

Venture capital began in the United States, its history dating back to the 20th century, 20-30 years, a small number of wealthy American family have significant funds, they want through the normal investment activities to maximize the asset value. Because of inflation concerns led to currency devaluation, interest rates through access to value their assets can not satisfy their wishes clear, and they hope to establish and control equity investment emerging enterprises. On the other hand, some entrepreneurs (mainly from universities and other research institutions), they have a good business idea or ideas, but suffer from lack of funds, so they find these well-off family, to show them the blueprint to their magnificent for funding support. At first, for various reasons, these wealthy families do not want to disclose their names, so people called them “angels” (Angel). Personal relationships can also usually find them through the angel for angel capital. Because venture capital is long-term investment, investment decision-making is a complex process, investors need to have considerable industry and technical knowledge, but these well-off families usually not a very big industry and technology to understand, therefore, some large affluent Family Employment Professionals on them to make investment decisions. This form of some family-based venture capital.

From the 20’s to 40’s, the U.S. is in a formative stage venture capital (private and non-professional). World War II, the U.S. venture capital into a prototype stage. The formation of venture capital model slowly. This model has been quoted so far. John. H. Whitney (John H. Whitney), Georges. Duliaote (Georges Doriot) and Arthur. Rock (Arthur Rock) is a prominent early American venture capitalists, they founded the U.S. venture capital, professional operation and industrialization has made a tremendous contribution.

Whitney is a United States Army during World War II intelligence captain mission in southern France when the Nazis arrested in 1945, he succeeded in escaping. U.S. State Department in 1945 -1,956 special cultural relations and international information services consultant. 1956, U.S. ambassador to Britain. Before World War II, he had done a risk investment. 1946 Whitney founded the United States invested five million U.S. dollars the first private venture capital firms – Whitney (Whitney & Company), engaged in venture capital activities. Now Whitney is the world’s largest venture capital companies. Whitney fully aware of the risk of post-war U.S. economic prosperity and investment will play a crucial role. He considered the operation of venture capital is a complicated systematic project, venture capital must be systematic and professional operation. Venture capital firms have to hire professional investment experts to manage risk capital, venture capital funds should support new industries. Whitney also the need to invest in people, a good idea or innovative business without a good team is not successful. He said: “one cent a dozen good ideas, good people too little.” Venture capitalists, we can see the value of the outstanding business talent, its far more than a good degree of creativity and a good product. Whitney’s life who have more than 350 companies (such as Compaq) has provided venture capital.

In 1946, Harvard University’s George. Duliaote and Boston Fed Raffo. Rich Landers (Ralph E. Flanders) created the first publicly traded U.S. venture capital firm – U.S. R & D Corporation (ARD), the main purpose is to help scientists and researchers who provide them with venture capital, to make their research results are faster commercialization, to market. Duliaote that the venture is to provide venture capital for the venture is not enough, must be in technology and management, to provide them with a series of help. In his view, only a return on asset value, not the final goal. He believes that the ultimate goal of venture capitalists or task is to create innovative entrepreneurs and innovative enterprises. U.S. R & D companies who have Digital Instruments (Digital Equipment Corp) provided venture capital.

Arthur. Rock is also a pioneer venture capitalist, he is often called the “dean of venture capitalists.” He creatively identify a limited partner and general partner of responsibility and the sharing of investment returns. He also supported the investment risk that not only is the product, more importantly, there is a good idea of the talented people (especially young engineers). Arthur. Rock worked Apple (Apple Computer) and other venture capital companies provided. All these views have their U.S. venture investment patterns become an important part of the lay of the U.S. venture capital firm’s main organizational structure, risk investment direction, the operation of venture capital, and risk investment purposes.

To 50 years, the U.S. government to support small businesses, in recommendation of President Eisenhower in 1953, Congress passed the Small Business Act, established the Small Business Administration (SBA). SBA’s functions are: as much as possible to support, assist and protect the interests of small businesses, as well as provide consulting services to small businesses. SBA provides loans directly to small businesses, as well as small business guarantee to banks, so that small businesses obtain loans from banks, while small businesses access to government procurement orders and provide management and technical assistance and training. Since 1953, business has been so far, SBA has been to 1 2.8 million small businesses to help provide direct and indirect, the current SBA loans to small businesses totaled 25 billion U.S. dollars Q). 1958, passed the Investment Act to create a Small Business Investment Company (SBIC) program. Under the SBA’s license, SBIC can be a private venture capital firms, through to enjoy the preferential treatments, long-term loans for small businesses and small enterprises in high-risk equity investment. SBIC is now a U.S. venture capital firms an important member of the family.

The late 70s to early 90s, the U.S. venture capital into a development period. The late 70s, most Americans recognize that venture capital industry is an emerging industry, the development of the U.S. economy an important source of power. The U.S. government also act quickly to develop the venture capital tilt series of preferential tax policies and incentives law, the bill most important are: to reduce the capital gains tax case (TCGRA), Employee Retirement Income Security Act (ERISA), small Enterprise Investment Incentive Act (SB Ⅱ A) and the Employee Retirement Income Security Act plan assets (ERISA PLAN ASSETS). Employee Retirement Income Security Act for the first time allow access to the risk of pension funds and other high-risk investment, and thus legally established pension to participate in venture capital. Small Business Investment Incentive Act and the Employee Retirement Income Security Act of assets scheme greatly simplifies the operation of venture capital, and the law provides for pension institutions could be venture capital firm’s limited partners. As a result, venture capital firms can more easily, quickly and effectively to create venture capital limited partnership fund (Limited Partnership), and more easily, quickly and effectively to emerging companies in venture capital.

The late 90’s, information technology, particularly the emergence of the Internet venture capital industry in the United States to bring vitality. From U.S. venture capital into a rapid development. Venture capital invested in the U.S. from 4 billion U.S. dollars in 1983 increased rapidly in 1996 to 300 million (1983 7.5 times), venture capital invested in 1999 reached 35.6 billion U.S. dollars (9 times in 1983 ), venture capital investment in 2000 reached 68.8 billion U.S. dollars ①. A 1996 survey showed: In 1996 only 10 million (the total amount of venture capital 3%) of venture capital invested in early stage companies. However, with advances in information technology, especially Internet applications, this investment pattern is changing rapidly. In 1998, according to well-known U.S. consulting firm (Price Water house Coopers) reports: In 1998, 41% of venture capital into the business of (also known as the concept stage or seed), and early businesses, these businesses accounted for in quantity then the total risk enterprises (venture capital support through the company) 50%. Venture capital to the U.S. economy has a huge influence, can be said that the U.S. economic vitality, “Combustion” and economic development “engine.” Venture capital to create countless new jobs here. For example, the mid 50’s Silicon Valley or the United States only about 10 million farmers in remote rural areas, with the help of some venture capital companies (such as: Intel, etc.) settled here, to the mid-60s, to 27 in employment in Silicon Valley more than 10,000. In 1984, employment reached 750,000, an annual increase of 40,000 job positions. According to Coopers & Ly brand of research, in 1992 -1 996, the venture capital business to support an annual increase of 40% of the employees, while big corporations lay off 2.5 percent annually. While venture capital to accelerate product innovation, which greatly increased productivity, improved export trade, reducing the trade deficit. Risk investments to create thousands of giant U.S. companies (such as: Microsoft, Intel, Cisco, Yahoo, etc.), creating a very dynamic economy of the United States. Figure 1 briefly outlines the U.S. venture capital stage of development.

U.S. venture capital firm currently has an estimated 5,000 or so, venture capital investment in 2000 reached 68.8 billion U.S. dollars, ranking first, the global venture capital market, accounting for 72% or so. The risk of investment in Western Europe, an early start, mainly in the United Kingdom, France and Germany, but nowhere near the speed of development and the United States, now ranks second, accounting for about 20%. With the current economic globalization, many U.S. companies began to conduct cross-border venture capital venture. Following Israel’s future, the Asia-Pacific region has increasingly become a focus of their investment. Governments around the world are increasingly aware of the risk investment of the national economic development. One response faster, more rapid action to the number of Israel, India, Singapore, South Korea. For example, under the Singapore Economic Development Board (EDB) of the report, to the end of 1999, Singapore has established a total of more than 100 billion dollars in venture capital. China’s venture capital began in the mid-80s, almost the same time starting with Singapore, but the lack of sources of venture capital is still not out of the formation of efficient channels, lack of professional venture capital managers and professional operation, and to encourage the risk of business without the corresponding policies and regulations and other reasons, the 80’s has been slow developing. To the 90’s there was a clear trend. At present our own venture capital firm about 100, has entered the Chinese market for foreign venture capital firms about 40. But China’s venture capital industry has yet to be a favorable policy and regulations to establish as soon as possible, so rapid and healthy development.