The money, property, and other valuables which collectively represent the wealth of an individual or business.
Definition of venture capital
wealth available for investment in new or speculative enterprises
“ Venture Capital is defined as long-term equity investment in novel technology based projects with display potential for significant growth and financial return.”
- According to 1995 Finance Bill
Venture capital financing
Venture capital financing is a type of financing by venture capital: the type of private equity capital typically provided to early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company.
ORIGIN OF VENTURE CAPITAL
In the 1920’s and 30’s, the wealthy families of and individual investors provided the startup money for companies that would later become famous Eastern Airlines and Xerox are the more famous ventures they financed In its early years VC may have been associated with high technology, over the years the concept has undergone a change and as it stands today it implies pooled investment in unlisted companies
Characteristics Of VC
Mode of Investment.
High risk-Return Ventures.
Nature Of Firms.
VENTURE CAPITAL INVESTMENT PROCESS
Due diligence (Evaluation)
Post investment activity
Dimensions of Venture Capital
Stages OF Venture Capital Financing
Early Stage Financing
Stages of VC Financing (Contd.)
Methods of Evaluation of VC
First Chicago Method.
Revenue Multiplier Method.
Expected Earnings level.
Future Market Valuation.
Present Value of VC.
Minimum Percentage of Ownership.
First Chicago Method
Present value of VC .
Expected value of VC.
Minimum Percentage of Ownership :
Finance sought * 100
Expected Present Value of the Venture Capitalist
Revenue Multiplier Method
Annual revenue of the company * estimated revenue multiplier
Provides large sum of finance &expertise.
Business & Management Consultations.
Encourages new breed of Entrepreneur.
Pricing / Negotiation.
Control / demand of the board of the company .
Industry specific .
Bring enormous pressure to profit quickly .
Long and complex process.
Requirement of Professional business Plan Drawer .
Venture Capital industry in India
Risk Capital and Technology Finance Corporation limited.
IDBI venture capital fund.
Technology development and Information Company of India Limited (TDICI)
Indus Venture Capital fund.
Small Industrial Development bank of India (SIDBI).