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What is venture capital & venture capital in india
Venture capital is money provided to startup companies and small businesses for long-term growth potential. It features a long investment time horizon, lack of liquidity, high risk, focus on high-tech industries, and equity participation. Advantages include access to large funds and expertise, while disadvantages include loss of founder autonomy and complex legal processes. Venture capital in India is provided through various public and private sector funds and regulated by SEBI. Key sectors attracting venture capital include IT, energy, manufacturing, and media/entertainment. Cities like Mumbai, Bangalore, Delhi, Chennai, Hyderabad, and Pune are major hubs for venture capital investment in India.
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Overview of the presentation and team members involved in discussing venture capital.
Venture capital is defined as money from investors for startups with long-term growth potential.
Key traits include long-time horizon, high risk, and equity participation in businesses.
Benefits comprise large equity funds, wealth expertise, and no obligatory repayment for businesses.
Drawbacks include complex processes and founders losing some control over their businesses.
Different financial stages with associated risks and funding lengths, ranging from seed money to public issues.
Steps in VC investments include deal origination, due diligence, deal structuring, and post-investment.
Various financing methods include equity, loans, income notes, and participatory debentures.
Common exit strategies for venture capitalists include IPOs, trade sales, and company acquisitions.
An overview of venture capital funding sources and structure within India.
Categories of VCFs in India by promoting agencies: central & state institutions, banks, and private sector.
SEBI outlines rules for VCFs, including minimum investment, regulations for equity investment, and sector restrictions.
Venture capital firms seek high ROI, primarily from companies with significant growth potential through successful exits.
Distribution of venture capital across various sectors including IT, manufacturing, and healthcare.
Cities like Mumbai and Bangalore excel in attracting VC investments across various sectors.
Closing remarks signaling the end of the venture capital presentation.
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What is venture capital & venture capital in india
- 1. WELCOME TO VENTURECAPITAL PRESENTATION
- 2. Presented By:Sandeep Mane AmolWaghmare Nisha Negi Rupali
- 3. WHAT IS VENTURECAPITAL Money provided by investors to startup firms and small businesses with perceived long-term growth potential.
- 4. FEATURES OF VENTURECAPITAL • • • • • • Long-time horizon Lack of liquidity High risk High-tech Equity participation and capital gains Participation in management
- 5. ADVANTAGES OF VENTURECAPITAL • 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 VENTURECAPITAL • 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 & Riskof 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 Dealorigination Screening Due diligence (Evaluation) Deal structuring Post investment activity Exit plan
- 10. METHODS OF VENTUREFINANCING 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 publicoffer(IPOs) Trade sale Promoter buy back Acquisition by another company
- 12. VENTURE CAPITAL FUNDINGIN INDIA
- 13. Promoted By All India Financial Institutions StateLevel 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 fundsin 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 promotedby 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 byprivate 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 VCFmay 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 least80% 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 GROWTHOF VENTURE CAPITAL High Technology Human Resource Capital Scientific & Technical Research Government Initiative SEBI Initiative
- 21. How does theVenture 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 industrywise 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 attractingventure 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.