Abstract:Aiming at the problem that government resources to support innovation and entrepreneurship is difficult to effectively allocate due to the information asymmetry between the government and the innovation and entrepreneurship entities. Based on information asymmetry theory, this paper proposes the functional positioning and mechanism of the innovation and entrepreneurship competition. The paper believes that the innovation and entrepreneurship competition can promote the government to accurately identify high-quality projects, outstanding enterprises and talents through information transmission, screening, disclosure, dissemination and other mechanisms. Based on this, the paper takes China Innovation and Entrepreneurship Competition (Guangdong Division) as an example to discuss and evaluate the practical effects of the innovation and entrepreneurship competition mechanism in supporting the innovation and entrepreneurship of small and medium-sized enterprises. Finally, from the system design and the government perspective, counter measures and suggestions such as optimizing the organization of the competition, strengthening the integration of resources, and strengthening coordination and linkage are put forward.