What is venture capital?
Venture capital means funds made available
for startup firms and small businesses with
exceptional growth potential.
Venture capital is long
term risk capital to finance
high technology projects
which involve risk but at the
same time has strong
potential for growth.
The SEBI defined Venture Capital fund in its
regulation 1996 as ‘a fund established in the form
of a company or trust which raises money through
loans, donations, issue of securities or units as the
case may be & makes or proposes to make
investments in accordance with the regulations’.
FEATURES OF VENTURE
Long term investment:
Lack of liquidity:
High risk return:
ADVANTAGES OF VENTURE CAPITAL
provide large sum of equity finance.
Venture Capitalist are rewarded by business
success & the capital gain.
Able to bring wealth and expertise to your
The Venture Capitalist also has a wide network of
Providing additional funds.
DISADVANTAGES OF VC
Lengthy and complex process (needs
detailed business plan, financial projections
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
Problems facing by VC
Requirement of an experienced management team.
Requirement of an above average rate of return on
Longer payback period.
Uncertainty regarding the success of the product in
Questions regarding the infrastructure details of
Skills and Training required.
Interference in Business:
Top cities attracting VC investments:
Software services, BPO, Media,
Computer graphics, Animations,
Finance & Banking
IT & Bio-technology
Software services, Telecom
IT , Telecom
IT & ITES, Pharmaceuticals
Bio-technology, IT , BPO
VC industry wise
IT & ITES
Media & Ent.
Shipping & logistics
Eng. & Const.
VC funding in India
VCFs in India can be categorized into following five
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)
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:
- Can bank Venture Capital Fund
- SBI Capital Market Ltd
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
- Walden International Investment Group
- HSBC Private Equity
- management Mauritius Ltd
Remedies taken for VC
Reduce the rules and regulations of SEBI.
Investment made on development of management and
employees through training, improving skills.
Avoid venture capitalist in interference in Business
Increasing market facilities.
Provide more infrastructure facilities.