In this paper, we show that: Venture Capital and Private Equity have changed their investment strategy in China from only focusing on some specific industries to all the industries closely related to China’s fast-growing economy.

With China’s growing economic strength , private equity funds in China have developed rapidly, but As for the private equity investment funds have not yet taken the form of a unified opinion better.

In the practice of private equity investment in China,how to valuate is a significant problem, and sink into a dilemma.

As the private equity itself has non-transparent, non-liquid characteristics, it faces many endogenetic and exogenous risks in the operation process.

Private Equity (PE) is now a new thing with rapid growth rate and playing an important role in Chinese capital market.

Therefore,private equity is a main channel to expand the scope of participators.

This paper sets forth on the analysis of development of private equity funds in China, comparing the legislation of different countries, and comments on the problems of private equity funds in our capital market at the present.

Along with China’s rapid economic development, the private equity fund, as a new type of financial intermediaries, has begun to play an increasingly important role in the financial market.