Venture capital

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  • 1. By, Sreepooja.S.P.
  • 2. •Form of Equity Financing •Designed for funding high risk and reward projects •Direct investment in securities •Financing high technology projects •Fostering growth and development •Evaluation of new management teams •In India venture capital is of recent origin
  • 3. New guidelines to Venture Capital • Venture capital funds/Companies can be set up by public sector financial institutions, SBI and scheduled banks. • Joint ventures between private sector and institutional promoters are permitted if:  Private sector holding is 20% or less; and  Private sector holding is not the largest single holding.  Minimum fund size is Rs. 10 crores.  Debt equity ratio should also not exceed 1:1.5  Foreign equity is permitted up to 25% while NRI to 74% on non repatriable basis and up to 25% to 40% on repatriable basis is permitted.
  • 4. Structure of Venture Capital
  • 5. TYPES •Business Situation •Some invest solely in certain industries. •Some prefer operating locally while others will operate nationwide or even globally. •VC expectations often vary. Some may want a quicker public sale of the company or expect fast growth. The amount of help a VC provides can vary from one firm to the next.
  • 6. ROLES Venture Partners Principal Associate Entrepreneur –inresidence(EIR)
  • 7. FUNDING STAGES IN VC INVESTING
  • 8. FINANCING STAGES IN VC Seed Funding Start up Growth 2nd Round Expansion Exit of Venture Capitalist
  • 9. a) Equity Share Capital b) Conditional Loan
  • 10. Drawbacks of VC Industry Insufficient understanding of venture capital as commercial activity. Support to the venture capital industry, by the govt. is inadequate. Exit options available to the venture capitalist are limited. Market limitations hinder the growth of venture capital industry. The inadequacy of the legal frame work of venture capital industry.