Role Of Risk Capital In Growth Of Sm Es

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Role Of Risk Capital In Growth Of Sm Es in India (IT industry)

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Role Of Risk Capital In Growth Of Sm Es

  1. 1. Mayank Singh Enroll. No. A0102106019 Roll No. A0102106A25
  2. 2. <ul><li>Every business, no matter how big or small, needs money to meet its short-term, medium-term and long-term capital requirements. </li></ul>
  3. 3. Types of financing options available <ul><li>Self Capital Financing </li></ul><ul><li>3 F Financing </li></ul><ul><li>Debt Financing </li></ul><ul><li>Risk Capital Financing </li></ul>
  4. 4. Type of Risk Capital Financing <ul><li>Angel Investment </li></ul><ul><li>Venture Capital </li></ul><ul><li>Private Equity </li></ul><ul><li>Mezzanine </li></ul>
  5. 5. Typical risk capital investment schedule <ul><li>Finding </li></ul><ul><li>Business plan </li></ul><ul><li>Due diligence </li></ul><ul><li>Valuation </li></ul><ul><li>Financing </li></ul><ul><li>Closing the financing </li></ul>
  6. 6. Objectives <ul><li>Attitude of SME’s towards the utilization of risk capital. </li></ul><ul><li>Type of financing does SME’s considering presently. </li></ul><ul><li>If risk capital is being utilized then which type of risk capital and at what stage SME’s prefer them. </li></ul><ul><li>If utilizing risk capital then what has been the approach? </li></ul><ul><li>What are the reasons which stop SME’s from utilizing risk capital? </li></ul>
  7. 7. Research <ul><li>Sample Size: 20(IT SME’s in Noida region) </li></ul><ul><li>Action Plan for data Collection: </li></ul><ul><ul><li>Primary data: This was conducted through a survey of SMEs into IT sector followed by a questionnaire. </li></ul></ul><ul><ul><li>Secondary data: General view of risk capital financing in India and what Risk capital financing firms perceive about the SME’s in India through various journals on Risk capital financing and SME’s. </li></ul></ul>
  8. 8. Attitude of SME’s Towards the utilization of risk capital KNOW UTILIZED If Utilized BETTER If not INTERESTED/LOOKING KNOWING MORE CONTACT ANY CONSULTANT/INTERMEDIARY/AGENTS
  9. 9. Type of financing does SME’s considering presently GENERALLY BEING CONSIDERED WHILE STARTING UP
  10. 10. If risk capital is being utilized then which type of risk capital and at what stage SME’s prefer them. TYPE OF RISK CAPITAL WAS BEING UTILIZED STAGE RISK CAPITAL HAS BEEN UTILIZED
  11. 11. If utilizing risk capital then what has been the approach? APPROACHED SATISFIED BY THE DUE DILIGENCE AND VALUATION PROBLEM S AT MONITORING ACTIVITIES EXIT POLICY DECIDED OPT FOR RISK CAPITAL IN FUTURE
  12. 12. What are the reasons which stop SME’s from utilizing risk capital?
  13. 13. Research Findings <ul><li>No one is fully confident about the risk capital. </li></ul><ul><li>SME’s mostly are afraid of debt </li></ul><ul><li>Most of the SME’s depends on their self capital </li></ul><ul><li>Very few number of SMEs utilizing risk capital </li></ul><ul><li>Mostly venture capital funding is being opted by the SMEs </li></ul><ul><li>It was a myth that risk capital firms mainly prefer later stage </li></ul>
  14. 14. <ul><li>The SMEs which didn’t opted for risk capital financing had various reason but most common being that they never felt a need for risk capital financing and secondly was the complicated process and not willing share its equity. </li></ul>
  15. 15. Conclusion <ul><li>Risk capital can play a role in growth of SMEs in India but at present because of lack of knowledge its not been utilized by majorly of SMEs in India </li></ul><ul><li>Risk capital financing needs to be promoted. SMEs needs to be educated about the same </li></ul><ul><li>It’s a better option then debt financing but the process and finding the investor is another hurdle for one who is looking for. </li></ul>
  16. 16. Thank You

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