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VENTURE CAPITAL FINANCING
CONCEPT , PURPOSE AND SCHEME
PRESENTED BY VISHALI NS
VENTURE CAPITAL FINANCING
★ Venture capital is a form of financing that provides funds to early stage,
emerging companies with high growth potential, in exchange for equity or an
ownership stake.
★ Venture capitalists take the risk of investing in startup companies, with the
hope that they will earn significant returns when the companies become a
success.
DEFINITION OF VENTURE CAPITAL
“Venture capital is Money for investment in innovative enterprises or research in
which both the risk of loss and the potential for profit may be considerable”
Some of the successful companies that gained success from venture capital
funding include Facebook, Uber, Twitter, Airbnb, Paypal, and Xiaomi .
CONCEPT OF VENTURE CAPITAL
❏ Venture capital refers to the risk capital supplied to growing companies and it
takes the form of share capital in the business firms.
❏ Venture capital refers to the commitment of capital and knowledge for the
formation and setting up of companies particularly to those specialising in new
ideas or new technologies.
❏ A simultaneous input of skills needed to set the firm up, design its marketing
strategy, organise and manage it , for fostering the growth and development of
enterprises.
PURPOSES OF VENTURE CAPITAL
❏ Promotes Entrepreneurs
❏ Promotes products
❏ Encourages customers
Example:
Hot mail dot com. It was a project invented by an young Indian graduate from
Bangalore, by name Sabir Bhatia. This project was developed by him due to the
financial assistance provided by the venture capital firms in Silicon Valley, U.S.A.
His project was later on purchased by Microsoft company, U.S.A. The Chairman of
the company, Mr. Bill Gates offered 400 Million US Dollars
CONTD..
❏ Brings out latent talent
❏ Promotes exports
❏ Creates more employment opportunities
❏ Brings financial viability
❏ Helps technological growth
❏ Helps sick companies
STAGES OF VENTURE CAPITAL FINANCING
THE SEED STAGE
❏ When the company is often little more than an idea for a product or service that has the
potential to develop into a successful business down the road.
❏ Entrepreneurs spend most of this stage convincing investors that their ideas represent
a viable investment opportunity.
❏ Funding amounts in the seed stage are generally small, and are largely used for things
like marketing research, product development, and business expansion, with the goal of
creating a prototype to attract additional investors in later funding rounds.
THE STARTUP STAGE
❏ In the startup stage, companies have typically completed research and
development and devised a business plan, and are now ready to begin advertising
and marketing their product or service to potential customers.
❏ Typically, the company has a prototype to show investors, but has not yet sold any
products.
❏ At this stage, businesses need a larger infusion of cash to fine tune their products
and services, expand their personnel, and conducting any remaining research
necessary to support an official business launch.
THE FIRST STAGE
❏ Sometimes also called the “emerging stage” .
❏ First stage financing typically coincides with the company’s market launch, when
the company is finally about to start seeing a profit.
❏ Funds from this phase of a venture capital financing typically go to actual product
manufacturing and sales, as well as increased marketing.
❏ To achieve an official launch, businesses usually need a much bigger capital
investment, so the funding amounts in this stage tend to be much higher than in
previous stages.
THE EXPANSION STAGE
❏ Also commonly referred to as the second or third stages.
❏ The expansion stage is when the company is seeing exponential growth and
needs additional funding to keep up with the demands.
❏ Because the business likely already has a commercially viable product and is
starting to see some profitability,
❏ Venture capital funding in the emerging stage is largely used to grow the business
even further through market expansion and product diversification.
THE BRIDGE STAGE
❏ The final stage of venture capital financing, the bridge stage is when companies have
reached maturity.
❏ Funding obtained here is typically used to support activities like mergers, acquisitions,
or IPOs.
❏ The bridge state is essentially a transition to the company being a full-fledged, viable
business.
❏ At this time, many investors choose to sell their shares and end their relationship with
the company, often receiving a significant return on their investments.
SCHEMES BY GOVERNMENT
SOME GOVERMENTAL SCHEMES - (which has supported firms and large number
venture)
There are broadly three types of government programmes
A. Direct supply of capital to venture capital firms or small firms:
B. Financial incentives for investing in venture capital funds or small firms; and
C. Regulations controlling types of venture capital investors.
VENTURE CAPITAL ASSISTANCE SCHEME
Venture Capital Assistance is financial support in the form of an interest free loan
provided by SFAC ( Small Farmers’ Agri-Business Consortium ) to qualifying
projects to meet shortfall in the capital requirement for implementation of the
project.
IMPLEMENTATION PERIOD
The Scheme will be implemented during 2012-17 in the XII Plan with a central
assistance of Rs.500.00 Crores.
IMPLEMENTARY AGENCY
The Scheme will be implemented by Small Farmers’ Agribusiness Consortium
(SFAC), a registered society functioning under Department of Agriculture &
Cooperation, Ministry of Agriculture.
ELIGIBLE FINANCING INSTITUTIONS
All Notified Financial Institutions notified by the Reserve Bank of India where the
ownership of the Central/State Government is more than 50% such as
nationalised banks, SBI & its Subsidiaries, IDBI, SIDBI, NABARD, NCDC, NEDFi,
RRBs & State Financial Corporations.
ELIGIBLE PERSON
Assistance under the Scheme will be available to
◆ Individuals; Farmers;
◆ Producer Groups;Partnership/Proprietary Firms;
◆ Self Help Groups; Companies;
◆ Agripreneurs; units in agri-export zones, and
◆ Agriculture graduates Individually or in groups for setting up agribusiness
projects.
OBJECTIVE OF SCHEME
(a) To facilitate setting up of agribusiness ventures in close association with all
Notified Financial Institutions .
(b) To provide assured market to producers for increasing rural income & employment.
(c) To strengthen backward linkages of agribusiness projects with producers.
(d) To assist farmers, producer groups, and agriculture graduates to enhance their
participation in value chain through Project Development Facility.
(e) To arrange training and visits, etc. of agripreneurs in setting up identified
agribusiness Projects.
REFERENCE
❏ Williams, Harshit and Shah Birendra.2013. Venture Capital Financing: A Need
for Innovative Business
Entrepreneur’s.https://www.researchgate.net/publication/332181942_Ventur
e_Capital_Financing_A_Need_for_Innovative_Business_Entrepreneur's/citatio
n/download
❏ https://www.yourarticlelibrary.com/financial-management/venture-
capital/venture-capital-concept-characteristics-and-functions/72034
❏ https://gouchevlaw.com/stages-venture-capital-financing/
❏ http://sfacindia.com/VCA_Scheme.aspx
THANK YOU...

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VENTURE CAPITAL FINANCING - CONCEPT, PURPOSE AND SCHEMES. pptx

  • 1. VENTURE CAPITAL FINANCING CONCEPT , PURPOSE AND SCHEME PRESENTED BY VISHALI NS
  • 2. VENTURE CAPITAL FINANCING ★ Venture capital is a form of financing that provides funds to early stage, emerging companies with high growth potential, in exchange for equity or an ownership stake. ★ Venture capitalists take the risk of investing in startup companies, with the hope that they will earn significant returns when the companies become a success.
  • 3.
  • 4. DEFINITION OF VENTURE CAPITAL “Venture capital is Money for investment in innovative enterprises or research in which both the risk of loss and the potential for profit may be considerable” Some of the successful companies that gained success from venture capital funding include Facebook, Uber, Twitter, Airbnb, Paypal, and Xiaomi .
  • 5. CONCEPT OF VENTURE CAPITAL ❏ Venture capital refers to the risk capital supplied to growing companies and it takes the form of share capital in the business firms. ❏ Venture capital refers to the commitment of capital and knowledge for the formation and setting up of companies particularly to those specialising in new ideas or new technologies. ❏ A simultaneous input of skills needed to set the firm up, design its marketing strategy, organise and manage it , for fostering the growth and development of enterprises.
  • 6. PURPOSES OF VENTURE CAPITAL ❏ Promotes Entrepreneurs ❏ Promotes products ❏ Encourages customers Example: Hot mail dot com. It was a project invented by an young Indian graduate from Bangalore, by name Sabir Bhatia. This project was developed by him due to the financial assistance provided by the venture capital firms in Silicon Valley, U.S.A. His project was later on purchased by Microsoft company, U.S.A. The Chairman of the company, Mr. Bill Gates offered 400 Million US Dollars
  • 7. CONTD.. ❏ Brings out latent talent ❏ Promotes exports ❏ Creates more employment opportunities ❏ Brings financial viability ❏ Helps technological growth ❏ Helps sick companies
  • 8. STAGES OF VENTURE CAPITAL FINANCING THE SEED STAGE ❏ When the company is often little more than an idea for a product or service that has the potential to develop into a successful business down the road. ❏ Entrepreneurs spend most of this stage convincing investors that their ideas represent a viable investment opportunity. ❏ Funding amounts in the seed stage are generally small, and are largely used for things like marketing research, product development, and business expansion, with the goal of creating a prototype to attract additional investors in later funding rounds.
  • 9. THE STARTUP STAGE ❏ In the startup stage, companies have typically completed research and development and devised a business plan, and are now ready to begin advertising and marketing their product or service to potential customers. ❏ Typically, the company has a prototype to show investors, but has not yet sold any products. ❏ At this stage, businesses need a larger infusion of cash to fine tune their products and services, expand their personnel, and conducting any remaining research necessary to support an official business launch.
  • 10. THE FIRST STAGE ❏ Sometimes also called the “emerging stage” . ❏ First stage financing typically coincides with the company’s market launch, when the company is finally about to start seeing a profit. ❏ Funds from this phase of a venture capital financing typically go to actual product manufacturing and sales, as well as increased marketing. ❏ To achieve an official launch, businesses usually need a much bigger capital investment, so the funding amounts in this stage tend to be much higher than in previous stages.
  • 11. THE EXPANSION STAGE ❏ Also commonly referred to as the second or third stages. ❏ The expansion stage is when the company is seeing exponential growth and needs additional funding to keep up with the demands. ❏ Because the business likely already has a commercially viable product and is starting to see some profitability, ❏ Venture capital funding in the emerging stage is largely used to grow the business even further through market expansion and product diversification.
  • 12. THE BRIDGE STAGE ❏ The final stage of venture capital financing, the bridge stage is when companies have reached maturity. ❏ Funding obtained here is typically used to support activities like mergers, acquisitions, or IPOs. ❏ The bridge state is essentially a transition to the company being a full-fledged, viable business. ❏ At this time, many investors choose to sell their shares and end their relationship with the company, often receiving a significant return on their investments.
  • 13. SCHEMES BY GOVERNMENT SOME GOVERMENTAL SCHEMES - (which has supported firms and large number venture) There are broadly three types of government programmes A. Direct supply of capital to venture capital firms or small firms: B. Financial incentives for investing in venture capital funds or small firms; and C. Regulations controlling types of venture capital investors.
  • 14. VENTURE CAPITAL ASSISTANCE SCHEME Venture Capital Assistance is financial support in the form of an interest free loan provided by SFAC ( Small Farmers’ Agri-Business Consortium ) to qualifying projects to meet shortfall in the capital requirement for implementation of the project. IMPLEMENTATION PERIOD The Scheme will be implemented during 2012-17 in the XII Plan with a central assistance of Rs.500.00 Crores.
  • 15. IMPLEMENTARY AGENCY The Scheme will be implemented by Small Farmers’ Agribusiness Consortium (SFAC), a registered society functioning under Department of Agriculture & Cooperation, Ministry of Agriculture. ELIGIBLE FINANCING INSTITUTIONS All Notified Financial Institutions notified by the Reserve Bank of India where the ownership of the Central/State Government is more than 50% such as nationalised banks, SBI & its Subsidiaries, IDBI, SIDBI, NABARD, NCDC, NEDFi, RRBs & State Financial Corporations.
  • 16. ELIGIBLE PERSON Assistance under the Scheme will be available to ◆ Individuals; Farmers; ◆ Producer Groups;Partnership/Proprietary Firms; ◆ Self Help Groups; Companies; ◆ Agripreneurs; units in agri-export zones, and ◆ Agriculture graduates Individually or in groups for setting up agribusiness projects.
  • 17. OBJECTIVE OF SCHEME (a) To facilitate setting up of agribusiness ventures in close association with all Notified Financial Institutions . (b) To provide assured market to producers for increasing rural income & employment. (c) To strengthen backward linkages of agribusiness projects with producers. (d) To assist farmers, producer groups, and agriculture graduates to enhance their participation in value chain through Project Development Facility. (e) To arrange training and visits, etc. of agripreneurs in setting up identified agribusiness Projects.
  • 18. REFERENCE ❏ Williams, Harshit and Shah Birendra.2013. Venture Capital Financing: A Need for Innovative Business Entrepreneur’s.https://www.researchgate.net/publication/332181942_Ventur e_Capital_Financing_A_Need_for_Innovative_Business_Entrepreneur's/citatio n/download ❏ https://www.yourarticlelibrary.com/financial-management/venture- capital/venture-capital-concept-characteristics-and-functions/72034 ❏ https://gouchevlaw.com/stages-venture-capital-financing/ ❏ http://sfacindia.com/VCA_Scheme.aspx