Venture capital
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Venture capital

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Venture capital Venture capital Presentation Transcript

  • Roshankumar S PimpalkarEmail: roshankumar.2007@rediffmail.com
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comVenture capital is money provided by professionals whoinvest alongside management, in young, rapidly growingcompanies that have the potential to develop intoeconomic powerhouse.Venture capital firms are generally private partnerships, orclosely held private companies funded by private andpublic pension funds. It is also referred as Risk capital
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comVenture capitalists:Finance new rapidly growing companiesPurchase equity sharesAssists in the development of new products or servicesAdd value to the enterprise through active participationin management
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comVenture capitalists invest inFirst generation businesses promoted by first generationentrepreneursUntried and untested products and technologyHigh risk projects that have high risk of failures but withenormous possible rewards
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comStages of Venture capital assistance:Seed moneyStart-up capitalSecond and third stage assistanceMezzanine financing
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comSeed MoneyIt refers to financing the project at the development stageof product or service. At this stage risk is highest. There isno guarantee that the prototype will evolve successfullyand later turn out to be viable commercially. Very fewventure capitalist firms specialize in seed-capital financing.
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comStart-up capitalAt this stage funds, which are adequate to generate initialsales sufficient in volume to yield, are provided. In most ofthe cases it is provided in the form of private placement inequity of the venturer-entity. The funding is for the periodof 3 to 5 years at the end of which the entity is expected toachieve a stable growth.
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comSecond and third stage assistanceIn case the initial start-up funding may prove to beinadequate because of inefficiency of management orunexpected changes in operating environment, furtherfunds are infused by the venture capitalist.
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comMezzanine financingSometimes company needs money to fund expansionprograms, which would help it to make public offering at alater stage. Finance provided for such expansion is knownas Mezzanine financing. Its duration is very short.
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comModes of financing:Pure equity financingConditional loans, repayable in the form of royalties onsalesIncome notes, a hybrid instrument which carries returnsboth in form of interest and contingent payment linked tosales or profit levelsParticipating debentures carrying returns ranging fromzero initially, to nominal market rates for an interim periodand profit sharing arrangement over and above nominalmarket rate of interest at the end.
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comBefore investing, venture capitalists look at threeareas, namely, the proposed product or service, thepotential market and the management team.
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comVC’s evaluate the project by determining the followingPossible gains from capital infusionCapability of managementFinancial projections and its variabilityPossible exit strategy
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comExpectation of returnsThe business in this case are highly risky hence theexpectation of returns are high. The returns expectedmight range from 60 to 80% for seed money financing and20 to 25% for second and third stage financing
  • Roshankumar S Pimpalkar Email: roshankumar.2007@rediffmail.comThe Pay DayFor a venture capitalist, an Initial Public Offering (IPO) isthe ‘Pay-Day’. That’s when they get the return on theirinvestment. Most venture investors consider IPO as thebest type of “exit” point. A successful exit is also seen bymany market-watcher as a barometer to measure theexpertise of the venture investor, and the success of thefonder-owners themselves.
  • IF YOU HAVE ANY SUGGESTION, OPINION OR FEEDBACK PLEASE FEEL FREE TO WRITE US AT roshankumar.2007@rediffmail.com
  • Roshankumar S Pimpalkar