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What is venture capital & venture capital in india
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What is venture capital & venture capital in india


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What is venture capital & venture capital in india

What is venture capital & venture capital in india

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  • 2. Presented By:Sandeep Mane Amol Waghmare Nisha Negi Rupali
  • 3. WHAT IS VENTURE CAPITAL Money provided by investors to startup firms and small businesses with perceived long-term growth potential.
  • 4. FEATURES OF VENTURE CAPITAL • • • • • • Long-time horizon Lack of liquidity High risk High-tech Equity participation and capital gains Participation in management
  • 5. ADVANTAGES OF VENTURE CAPITAL • They can provide large sum of equity finance • Able to bring wealth and expertise to your company • Easier to secure future funding from other sources • The business is not obligated to repay the money
  • 6. DESADVANTAGES OF VENTURE CAPITAL • Lengthy and complex process (needs detailed business plan, financial projections and etc.) • In the deal negotiation stage, you will have to pay for legal and accounting fees • Investors become part owners of your business - founder loss of autonomy or control
  • 7. Stages & Risk of financing Financial Stage Seed Money Start Up First Stage Period (Funds locked in years) 7-10 5-9 3-7 Risk Perception Extreme Activity to be financed For supporting a concept or idea or R&D for product development Very High Initializing operations or developing prototypes High Start commercials production and marketing
  • 8. Financial Stage Second Stage Period (Funds locked in years) 3-5 Risk Perception Activity to be financed Sufficiently high Expand market and growing working capital need Market expansion, acquisition & product development for profit making company Third Stage 1-3 Medium Fourth Stage 1-3 Low Facilitating public issue
  • 9. VC INVESTMENT PROCESS Deal origination Screening Due diligence (Evaluation) Deal structuring Post investment activity Exit plan
  • 10. METHODS OF VENTURE FINANCING The financing pattern of the deal is the most important element. Following are the various methods of venture financing: • Equity • Conditional loan • Income note • Participating debentures • Quasi equity
  • 11. Exit route • • • • Initial public offer(IPOs) Trade sale Promoter buy back Acquisition by another company
  • 13. Promoted By All India Financial Institutions State Level Financial Institutions Private Sector Institutions Commercial Banks Indian IFCI Venture Capital Funds Ltd. IDBI Venture Capital Fund ICICI Venture Fund Management Company Ltd. SIDBI Venture Capital Ltd. Foreign
  • 14. Venture capital funds in India VCFs in India can be categorized into following five groups: 1) Those promoted by the Central Government controlled development finance institutions. For example: - ICICI Venture Funds Ltd. - IFCI Venture Capital Funds Ltd (IVCF) - SIDBI Venture Capital Ltd (SVCL)
  • 15. 2) Those promoted by State Government controlled development finance institutions. For example: - Punjab Infotech Venture Fund - Gujarat Venture Finance Ltd (GVFL) - Kerala Venture Capital Fund Pvt Ltd. 3) Those promoted by public banks. For example: - Canbank Venture Capital Fund - SBI Capital Market Ltd
  • 16. 4)Those promoted by private sector companies. For example: - IL&FS Trust Company Ltd - Infinity Venture India Fund 5)Those established as an overseas venture capital fund. For example: - Walden International Investment Group - HSBC Private Equity management Mauritius Ltd
  • 17. Rules by SEBI  VCF are regulated by the SEBI (Venture Capital Fund) Regulations, 1996.  The following are the various provisions:  A venture capital fund may be set up by a company or a trust, after a certificate of registration is granted by SEBI on an application made to it. On receipt of the certificate of registration, it shall be binding on the venture capital fund to abide by the provisions of the SEBI Act, 1992.
  • 18. • A VCF may raise money from any investor, Indian, Non-resident Indian or foreign, provided the money accepted from any investor is not less than Rs 5 lakhs. The VCF shall not issue any document or advertisement inviting offers from the public for subscription of its security or units • SEBI regulations permit investment by venture capital funds in equity or equity related instruments of unlisted companies and also in financially weak and sick industries whose shares are listed or unlisted
  • 19.  At least 80% of the funds should be invested in venture capital companies and no other limits are prescribed. SEBI Regulations do not provide for any sectoral restrictions for investment except investment in companies engaged in financial services.
  • 20. REASONS FOR GROWTH OF VENTURE CAPITAL  High Technology  Human Resource Capital  Scientific & Technical Research  Government Initiative  SEBI Initiative
  • 21. How does the Venture Capital work?  Venture capital firms typically source the majority of their funding from large investment institutions.  Investment institutions expect very high ROI  VC’s invest in companies with high potential where they are able to exit through either an IPO or a merger/acquisition.  Their primary ROI comes from capital gains although they also receive some return through dividend.
  • 22. Venture capital industry wise segmentation Percentage 9.03 3.36 6.94 IT & ITES 7.73 Energy Manufacturing 12.92 11.5 Media & Ent. BFSI 4.32 11.43 Shipping & logistics Eng. & Const. Telecom Health care 4.82 27.95 Others
  • 23. Top cities attracting venture capital investments CITIES SECTORS MUMBAI Software services, BPO, Media, Computer graphics, Animations, Finance & Banking BANGALORE All IP led companies, IT & ITES, Bio-technology DELHI Software services, ITES , Telecom CHENNAI IT , Telecom HYDERABAD IT & ITES, Pharmaceuticals PUNE Bio-technology, IT , BPO
  • 24. THE END