This document discusses venture capital, including what it is, who venture capitalists are, the advantages and disadvantages of venture capital funding, and guidelines for venture capital companies in India. Specifically: - Venture capital is a type of private equity typically provided to early-stage, growth companies to generate returns through events like IPOs. It comes from sources like private firms, individual investors, corporations, and governments. - Venture capitalists are higher-risk investors who provide managerial and technical expertise in addition to funding. They seek higher returns to compensate for higher risks. - Advantages of venture capital funding include access to expertise, ability to form joint ventures, and helping technology and service sectors grow. Dis

1. Family & Non-familyFamily & Non-family
EntrepreneurEntrepreneur

2. Who are professionals?Who are professionals?
• Who have specific body of
knowledge
• Have a value & general know how
• Who manages professional mobility
• Who are reliable & trustworthy in
the sense of their performance.

3. Elements of professionalismElements of professionalism
• Responsibility
• Skillful
• Competency to retain & distribute
information
• Communicative
• Integrity
• Personal development of one self &
of others

4. Role of professionalsRole of professionals
• To see the on going trend
• To update their knowledge
• To maintain the chain of
professionals
• Provides training
• Competence development
• Guiding the related establishment

5. ProfessionalismProfessionalism
Professionalism is a commitment to
develop one’s skills & then
applying them to resolve problems
responsibly

6. Family EntrepreneurshipFamily Entrepreneurship
• Family Entrepreneurship: is defined
as an ownership control by
members of family in the form of its
management by taking this to the
generations ahead.

7. DifferentiationDifferentiation
On the basis of:
• Degree of open mindedness
• New practices
• Impartial HRM
• Organization oriented financial
management
• Decision making style

8. VENTURE CAPITALVENTURE CAPITAL

9. WHAT IS VENTURE CAPITAL?WHAT IS VENTURE CAPITAL?
Venture capital is a type of private equity (PE’s). Venture
capital is typically provided for early stage , high potential,
growth companies in the interest of generating a return
through an eventual realization event such as IPO.
Venture capital typically comes from four generic sources:
• Private venture capital firms
• Individual investors generally referred to as “angel
investors”
• Corporations making strategic investments
• Governmental sources.

10. VENTURE CAPITALISTSVENTURE CAPITALISTS
Venture capitalists comprise of professionals of
various fields. They provide funds to these firms
after carefully scrutinizing the projects. Their main
aim is to earn huge returns on their investments,
but their concepts are totally different from the
traditional moneylenders. They Know very well if
they may suffer losses in some projects, the other
will compensate the same due to high returns. They
take active participation in the management of the
company as well as provide the expertise and
qualities of a good banker, technologists, planner
and managers. Thus venture capitalists and the
entrepreneur literally act as partners.

11. VENTURE CAPITALISTSVENTURE CAPITALISTS
Venture capitalists are higher risk investors and, in
accepting these higher risks, all they desire is a
higher return on their investments. The venture
capitalists manage the risk/ reward ratio by only
investing in businesses that fit their investment
criteria.
A venture capitalist is a person or investment firm that
makes venture investments, and these venture
capitalists are expected to bring managerial and
technical expertise as well as capital to their
investments.

12. FEATURES OF VENTUREFEATURES OF VENTURE
CAPITALCAPITAL
For New Entrant
Continuous Involvements
Mode of Investment
Long Term Capital
Hands-on Approach
High Risk-Return Ventures
Source of Finance

13. ADVANTAGES OF VENTUREADVANTAGES OF VENTURE
CAPITAL FUNDINGCAPITAL FUNDING
As the venture capitalists are ready to lend their expertise
and standing to the entrepreneur, the local groups and
multinational companies can easily enter into joint
ventures.
Venture capitalists are also helpful to a large number of
smaller units under which they are able to upgrade their
technology to meet the demands of the major industrial
units.
Venture capitalists are also playing a significant role in
tapping the potentiality of service sectors. Thus, venture
capital is booming to exploit the potential of Indian
economy.

14. DISADVANTAGES OFDISADVANTAGES OF
VENTURE CAPITALVENTURE CAPITAL
Securing a deal with a VC can be a long and complex
process.
Person will be required to draw up a detailed business
plan, including financial projections for which the
entrepreneur may need professional help. Support from
his local business link may be available for this.
If he gets through the deal negotiation stage, he will have
to pay legal and according fees whether or not he
becomes successful in securing funds.

15. VENTURE CAPITALVENTURE CAPITAL
FUNDING PROCESSFUNDING PROCESS
Investment Valuation
Evaluation
Deal Structuring
Post Investment and Exit
Deal Origination

16. DIMENSIONS OF VENTUREDIMENSIONS OF VENTURE
CAPITALCAPITAL
1. Equity Participation
2. Conventional Loan
3. Conditional Loan

17. STAGES OF FINANCING OFFEREDSTAGES OF FINANCING OFFERED
IN VENTURE CAPITALIN VENTURE CAPITAL
1. Seed Money (Concept stage)
2. Start-up
3. First-Round (launched)
4. Second-Round (funding WC)
5. Third-Round (increasing plant capacity)
6. Fourth Round (going public)

18. TYPES OF FINANCINGTYPES OF FINANCING
1. Seed Financing
2. Start-up
(primary sources)
Angel Investors
Venture Capitalists
3. First-Round
(potential sources of financing)
Trade Credit
Small Business Administration (SBA)
Government Assistance programs
Commercial Banks
4. Second-Round

19. ADVANTAGES OF VENTUREADVANTAGES OF VENTURE
CAPITAL FUNDINGCAPITAL FUNDING
Even in the situation when entrepreneur having a good
project idea but no previous entrepreneurial track record
to leverage the firm, handles customers and bankers,
venture capital can help the entrepreneurs in successful
launch of their projects.
Rapid growth of technology across the globe has led to the
growth of technology in India but indigenous technology
has been slack due to unwillingness of the people to take
entrepreneurial risks.
Venture capital has gained importance as it solves the
sickness of a company.

20. GUIDELINES FOR VENTUREGUIDELINES FOR VENTURE
CAPITAL COMPANIESCAPITAL COMPANIES
The government of India has issued the following guidelines for
various venture capital funds operating in the country:
The financial institutions, SBI, scheduled banks and foreign banks
are eligible to establish venture capital companies or funds subject
to the approval as may be required from the RBI.
The venture capital funds have a minimum size of Rs. 10 crore and
a debt equity ratio of 1:15. If they desire to raise funds from the
public, promoters will be required to contribute minimum of 40%
of the capital.
The guidelines also provide for NRI investment upto 74% on a
non- repatriable basis.
The venture capital firm should be independent of the parent
organization.

21. GUIDELINES FOR VENTUREGUIDELINES FOR VENTURE
CAPITAL COMPANIESCAPITAL COMPANIES
The venture capital funds will be managed by professionals and can
be set-up as joint ventures even with non- institutional promoters.
The venture capital funds will not be allowed to undertake activities
such as trading, broking and money market operations they will
allowed to invest in leasing to the extent of 15% of the total funds
deployed. The investment on revival of sick units will be treated as
a part of venture capital activity.
A person holding a position of being a full time chairman, chief
executive, or managing director of a company will not be allowed to
hold the same position simultaneously in the venture capital fund/
company.
The venture capital assistance should be extended to the promoters
who are new, and are professionally or technically qualified with
inadequate resources.