Roshankumar S PimpalkarEmail: firstname.lastname@example.org
Roshankumar S Pimpalkar Email: email@example.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: firstname.lastname@example.orgVenture capitalists:Finance new rapidly growing companiesPurchase equity sharesAssists in the development of new products or servicesAdd value to the enterprise through active participationin management
Roshankumar S Pimpalkar Email: email@example.comVenture capitalists invest inFirst generation businesses promoted by first generationentrepreneursUntried and untested products and technologyHigh risk projects that have high risk of failures but withenormous possible rewards
Roshankumar S Pimpalkar Email: firstname.lastname@example.orgStages of Venture capital assistance:Seed moneyStart-up capitalSecond and third stage assistanceMezzanine financing
Roshankumar S Pimpalkar Email: email@example.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: firstname.lastname@example.orgStart-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: email@example.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: firstname.lastname@example.orgMezzanine 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: email@example.comModes of financing:Pure equity financingConditional loans, repayable in the form of royalties onsalesIncome notes, a hybrid instrument which carries returnsboth in form of interest and contingent payment linked tosales or profit levelsParticipating 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: firstname.lastname@example.orgBefore investing, venture capitalists look at threeareas, namely, the proposed product or service, thepotential market and the management team.
Roshankumar S Pimpalkar Email: email@example.comVC’s evaluate the project by determining the followingPossible gains from capital infusionCapability of managementFinancial projections and its variabilityPossible exit strategy
Roshankumar S Pimpalkar Email: firstname.lastname@example.orgExpectation 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: email@example.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.
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