venture capital finance

1. VENTURE CAPITAL FINANCING BY B.HARIHARAN

4. There should be a person to invest

5. If it happens then it is called as venture

6. The benefits are enormous but also involve risk

8. MOTION OF VENTURE CAPITAL DEFINITION : “ Venture capital is the investment of long term equity finance where the venture capitalist earns his return primarily in the form of capital gain” -according to Pratt

10. Generally considered as synonym of risky capital

11. Often thought as early stage financing for new &young enterprises

12. Focuses on growth that would like to see in small scale enterprises while they develop into large enterprises

13. Used for fostering the growth and development of enterprise

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20. ESSENTIAL ELEMENTS OF A BUSINESS PLAN

23. It is placed at the beginningIt is vital to give this summary significant thought and time as it may well determine the amount of consideration the venture capital investor will give to the detailed proposal

24. BACKGROUND ON THE VENTURE The business plan should provide a summary of the fundamental nature of the proposed venture and its activities and should also mention an outline of its objectives THE PRODUCT OR SERVICE -The plan should explain venture’s product /service in plain language -This is important if the product is technically oriented -A non specialist should also be able to understand the plan -should emphasize the product/service’s competitive edge or unique selling point -describe the state of development of the product /service

25. MARKET ANALYSIS -The plan should convince the venture capitalist that there is a real commercial opportunity for the business and its product/service. -It should define the market for the product/service and explain in which industry or sector the venture will operate. It should answer the following questions What is the size of the whole market? What are the prospects for this market? How developed is the market as a whole? How does the company fit within the market? Who are the competitors? What is their strategic positioning? What are their strengths and weaknesses?

26. MARKETING -Once defined who ,how, what & others it is necessary to address how the prospective business will expand these opportunities. -The plan should outline the companies sales and distribution strategy It should answer the following questions What is the companies planned sales force? What are its strategies for different markets? What is the companies pricing strategy? How is it as compared with competitors? What are the companies advertisement, public relations and promotion plans?

27. BUSINESS OPERATIONS The plan should explain -how the business operates -how the company makes the product -what are services provided -and others …… It should answer the following questions What are the sources of raw material? Who are the suppliers? What are labor requirements? What is the companies approach to industrial relations? The plan should out line the companies approach towards R&D

29. Finance & marketing and their roles should be specifiedThe plan should explain Control Performance Measures and remuneration for management Employees and others

31. What is level of gearing?(debt to shareholders fund ratio)

32. What is cost associated with business?

33. What are budget for each area of company’s activities?The plan should be feasible and not optimistic. It should highlight challenges and how they will be met.

34. AMOUNT AND USE OF FINANCE REQUIRED & EXIT OPPORTUNITY The business plan should state how much finance is required by the business and from what source i.e. management , venture capital and others and explain the purpose for which it will be applied. It should consider how the venture capital investor will exit the investment and make a return . Possible exit strategies for investors may include Floating the company on stock exchange Selling the company to trade buyers