Brief note on Venture Capital

1. VENTURE CAPITAL
By
o Hari Haran
o Hareesh
o Manoj

2. Topics to be Discussed
Introduction and Definition
Features of venture capital
Advantages and Disadvantages
Funding Process
Problems facing by VC
REMEDIES TAKEN FOR
VENTURE CAPITAL

3. INTRODUCTION:
Venture Capital Is “equity support to fund a new concepts that
involve a higher risk and at the same time, have growth and
profit”.
“Venture Capital is broadly implies an investment of long term,
equity finance in high risk projects with high rewards
possibilities”.

4. DEFINITION
The SEBI defined Venture Capital Fund in its regulation 1996 as
‘a fund established in the form of a company or trust Which raises
money through loans, donations, issue of securities or units as the
case may be & makes or proposes to make investments in
accordance with the regulations’.

5. FEATURES OF VENTURE CAPITAL
 Long term Investment
 Lack of Liquidity
 High risk Return
 High-tech
 Wide Scope
 Equity Participation and capital gains

6. ADVANTAGES
• Provide large sum of equity finance.
• Venture Capitalist are rewarded by business success and the capital
gain.
• Able to bring wealth and expertise to your company.
• The Venture Capitalist also has a wide network of contacts.
• Providing additional funds

7. Disadvantages
• Lengthy and complex process.
• 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.

8. Funding Process
The venture capital funding process typically involves four phases in the company &
development:
• Idea generation
• Start-up
• Ramp up
• Exit

9. CONT…
Step 1: Idea generation and submission of the Business Plan
Step 2: Introductory Meeting
Step 3: Due Diligence
Step 4: Term Sheets and Funding

10. PROBLEMS FACING BY VC
• Requirement of an experienced management team.
• Requirement of an above average rate of return on investment.
• Longer payback period.
• Uncertainty regarding the success of the product in the market.
• Questions regarding the infrastructure details of production.
• Skills and training required.
• Time period.
• Interference in Business.

11. REMEDIES TAKEN FOR VENTURE CAPITAL
• Reduce the rules and regulations of SEBI
• Investment made on development of management and employees
through training improving skills.
• Avoid Venture Capitalist in interference in Business activity.
• Increasing market facilities
• Provide more infrastructure facilities.