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The Impact Mechanism of Venture Capital on the Growth of Start-Up Enterprises and Its Effect Evaluation

Author(s)

Xinyi Fan*

Affiliation(s)

Department of Investment Studies, HeFei University, Anhui, China *Corresponding author.

Abstract

The purpose of this paper is to explore the mechanism of the impact of venture capital on the growth of start-ups and evaluate its effect. This paper analyzes in detail how venture capital contributes to the growth of start-ups from five aspects: capital acquisition, information asymmetry improvement, experience and resource supplement, incentive mechanism creation and signal transmission effect. The study found that venture capital not only provides the necessary financial support for start-ups and relieves their financial pressure, but also reduces information asymmetry and enhances market trust through due diligence and evaluation. At the same time, venture capital institutions also bring a wealth of investment experience and expertise to startups to help them build partnerships and expand market channels. In addition, venture capital institutions also stimulate the enthusiasm of start-up founders and key teams through incentive mechanisms, promoting team collaboration and mutual growth. Finally, the involvement of venture capital institutions, as a signal of enterprise operation ability, transmits a positive message to the market and affects the availability of external financing and listing cost of start-ups. The research in this paper is of great significance for understanding the role of venture capital in the growth of start-ups.

Keywords

Venture Capital; Start-Ups; Growth Impact; Effect Evaluation

References

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