Venture Capital & Private Equity Department of Business Administration,St.Joseph’s Engineering College, Vamanjoor. April 4...
Structure of Ownership <ul><li>Sole-Proprietor-Ownership Not Transferable </li></ul><ul><li>Partnership-Ownership Not Tran...
Classes of Funding <ul><li>Ownership Funding: Equity Shares, Preference Shares and Reserves </li></ul><ul><li>Debt Funding...
Relevance of Debt Funding? <ul><li>Gestation Period </li></ul><ul><li>Security Related </li></ul><ul><li>Compulsion of Pay...
Beauty of Equity <ul><li>Risk Bearing </li></ul><ul><li>No Need to Pay Dividend </li></ul><ul><li>No Redemption </li></ul>...
Equity Related Funding Agencies <ul><li>Angel Investors- High Networth Individuals </li></ul><ul><li>Venture Capital-Partn...
Venture Capital: Features <ul><li>Funding Mainly by Subscribing to Equity Shares </li></ul><ul><li>Evaluation of the Busin...
Enabling Environment <ul><li>Free Licensing Policy </li></ul><ul><li>Well Developed Capital Markets </li></ul><ul><li>New ...
Stages of Financing <ul><li>Seed Financing </li></ul><ul><li>Start-Up Financing </li></ul><ul><li>First Stage Financing </...
Venture Capital & Private Equity <ul><li>New Companies V Existing Companies </li></ul><ul><li>Investment Horizon 7 Years V...
Structure of Private Equity <ul><li>Limited Liability Partnership </li></ul><ul><li>Limited Partners and Unlimited Partner...
Active Private Equity <ul><li>HSBC Private Equity India Fund Limited </li></ul><ul><li>Alliance Venture Capital Advisors L...
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Venture Capital and Private Equity-B.V.Raghunandan

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A brief profile of venture and private equity funding as delivered by B.V.Raghunandan in a guest lecture to MBA students of St.Joseph's Engineering College, Vamanjoor, India

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Venture Capital and Private Equity-B.V.Raghunandan

  1. 1. Venture Capital & Private Equity Department of Business Administration,St.Joseph’s Engineering College, Vamanjoor. April 4, 2008
  2. 2. Structure of Ownership <ul><li>Sole-Proprietor-Ownership Not Transferable </li></ul><ul><li>Partnership-Ownership Not Transferable </li></ul><ul><li>Joint Stock Company: </li></ul><ul><li>- Private Limited…Restricted Transferable Ownership </li></ul><ul><li>- Public Limited….Unrestricted Transferability; Listed Company….Ownership is a Tradeable Commodity </li></ul>
  3. 3. Classes of Funding <ul><li>Ownership Funding: Equity Shares, Preference Shares and Reserves </li></ul><ul><li>Debt Funding: Debentures, Bonds and Long Term Loans </li></ul>
  4. 4. Relevance of Debt Funding? <ul><li>Gestation Period </li></ul><ul><li>Security Related </li></ul><ul><li>Compulsion of Payment of Interest </li></ul><ul><li>Compulsory Redemption </li></ul><ul><li>No Risk Bearing </li></ul><ul><li>Lesser Importance to Leverage due to Falling Tax Rates </li></ul><ul><li>Popularity of Zero Debt Capital Structure </li></ul>
  5. 5. Beauty of Equity <ul><li>Risk Bearing </li></ul><ul><li>No Need to Pay Dividend </li></ul><ul><li>No Redemption </li></ul><ul><li>No Security To be Offered </li></ul><ul><li>Wider Knowledge of Working </li></ul>
  6. 6. Equity Related Funding Agencies <ul><li>Angel Investors- High Networth Individuals </li></ul><ul><li>Venture Capital-Partnership With Limited Liability Partners </li></ul><ul><li>Private Equity-Partnership With Limited Liability Partners </li></ul>
  7. 7. Venture Capital: Features <ul><li>Funding Mainly by Subscribing to Equity Shares </li></ul><ul><li>Evaluation of the Business Idea, more by Intuition than by Standardised Evaluation Techniques </li></ul><ul><li>Prescribing Performance Benchmarks </li></ul><ul><li>Right of Management Buyin </li></ul><ul><li>New High Risk High Growth Industry </li></ul><ul><li>Exit Schedule </li></ul>
  8. 8. Enabling Environment <ul><li>Free Licensing Policy </li></ul><ul><li>Well Developed Capital Markets </li></ul><ul><li>New Projects </li></ul><ul><li>Low Taxation Policy </li></ul><ul><li>Professional Promoters </li></ul><ul><li>Risk Funding Culture </li></ul><ul><li>Enterprise Culture </li></ul><ul><li>Educational Institutions </li></ul><ul><li>Absorption of IT </li></ul><ul><li>Presence of Surplus Funds </li></ul><ul><li>Opening Up of the Economy </li></ul>
  9. 9. Stages of Financing <ul><li>Seed Financing </li></ul><ul><li>Start-Up Financing </li></ul><ul><li>First Stage Financing </li></ul><ul><li>Second Stage Financing </li></ul><ul><li>Mezzanine Financing </li></ul><ul><li>Bridge Financing </li></ul><ul><li>Management Buy-Out </li></ul><ul><li>Management Buyin </li></ul><ul><li>Turnaround Financing </li></ul>
  10. 10. Venture Capital & Private Equity <ul><li>New Companies V Existing Companies </li></ul><ul><li>Investment Horizon 7 Years V 5 years </li></ul><ul><li>Restricted Areas of Operation V Many Areas of Operation </li></ul><ul><li>Differences Fading Away </li></ul><ul><li>Private Equity is a Popular Expression </li></ul>
  11. 11. Structure of Private Equity <ul><li>Limited Liability Partnership </li></ul><ul><li>Limited Partners and Unlimited Partners </li></ul><ul><li>Limited Partners Provide Capital </li></ul><ul><li>Limited Partners get limited Dividend </li></ul><ul><li>Limited Partners Have Unlimited Access to Information and a Permanent Office in the Organisation </li></ul><ul><li>Unlimited Partners manage the Business </li></ul><ul><li>They get Most of the Profits in the Form of Bonus </li></ul><ul><li>One is Elected As the Chairman </li></ul><ul><li>Others may be Managing Directors </li></ul><ul><li>They also Control the Companies Funded </li></ul>
  12. 12. Active Private Equity <ul><li>HSBC Private Equity India Fund Limited </li></ul><ul><li>Alliance Venture Capital Advisors Ltd </li></ul><ul><li>JF Electra Advisors India Ltd </li></ul><ul><li>Draper International Ltd. </li></ul><ul><li>Temasek </li></ul><ul><li>New Vernon </li></ul><ul><li>Texas Pacific </li></ul><ul><li>Chrys Capital </li></ul><ul><li>New Bridge </li></ul><ul><li>General Atlantic </li></ul><ul><li>Blackstone </li></ul><ul><li>Underbridge </li></ul>
  13. 13. THANK YOU

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