This document provides an overview of venture capital. It defines venture capital as equity support that funds new business concepts with higher risk but also higher growth potential. The document outlines the typical stages of venture capital funding from seed money to bridge financing. It also describes the roles within a venture capital firm such as general partners and limited partners. Key features of venture capital investments are discussed like the long time horizon, lack of liquidity, high risk, and equity participation. Finally, the advantages of venture capital for the economy, investors, and entrepreneurs are summarized.
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venture capital, process of venture capital, stages of venture capital, stages and process of venture capital, early stage finance, later stage financing,
VENTURECAPITAL FINANCING
- By Dr. Ratna Sinha, Associate Professor, ISBR Business School, Bangalore
Venture capital funding is one of the important options for entrepreneurs to secure funding. Venture capital (VC) means risk capital. The risk envisaged may be very high or may be so high as to result in total loss or very less so as to result in high gains. This 35 slides power point presentation on Venture Capital Financing explains how the Venture Capital Funds are organized. The other objectives of the presentation intended to provide students with the terminology of VC and knowledge of the key industry facts. This presentation help to understand types of venture capital funds, mode of operations and industry- standard technique for the valuation of VC investments.
Many investors mistakenly base the success of their portfolios on returns alone. Few consider the risk that they took to achieve those returns. Since the 1960s, investors have known how to quantify and measure risk with the variability of returns, but no single measure actually looked at both risk and return together. Today, we have three sets of performance measurement tools to assist us with our portfolio evaluations. The Treynor, Sharpe and Jensen ratios combine risk and return performance into a single value, but each is slightly different. Which one is best for you? Why should you care? Let's find out.
Portfolio performance measures should be a key aspect of the investment decision process. These tools provide the necessary information for investors to assess how effectively their money has been invested (or may be invested). Remember, portfolio returns are only part of the story. Without evaluating risk-adjusted returns, an investor cannot possibly see the whole investment picture, which may inadvertently lead to clouded investment decisions.
VENTURECAPITAL FINANCING
- By Dr. Ratna Sinha, Associate Professor, ISBR Business School, Bangalore
Venture capital funding is one of the important options for entrepreneurs to secure funding. Venture capital (VC) means risk capital. The risk envisaged may be very high or may be so high as to result in total loss or very less so as to result in high gains. This 35 slides power point presentation on Venture Capital Financing explains how the Venture Capital Funds are organized. The other objectives of the presentation intended to provide students with the terminology of VC and knowledge of the key industry facts. This presentation help to understand types of venture capital funds, mode of operations and industry- standard technique for the valuation of VC investments.
Many investors mistakenly base the success of their portfolios on returns alone. Few consider the risk that they took to achieve those returns. Since the 1960s, investors have known how to quantify and measure risk with the variability of returns, but no single measure actually looked at both risk and return together. Today, we have three sets of performance measurement tools to assist us with our portfolio evaluations. The Treynor, Sharpe and Jensen ratios combine risk and return performance into a single value, but each is slightly different. Which one is best for you? Why should you care? Let's find out.
Portfolio performance measures should be a key aspect of the investment decision process. These tools provide the necessary information for investors to assess how effectively their money has been invested (or may be invested). Remember, portfolio returns are only part of the story. Without evaluating risk-adjusted returns, an investor cannot possibly see the whole investment picture, which may inadvertently lead to clouded investment decisions.
This deck outlines how venture capital works from the venture capital perspective from investment criteria, investment strategy, how deal flow works, and deal flow management.
India's ancient wisdom, which is still relevant today, inspires people to work for the larger objective of the well-being of all stakeholders. For example, our Rushees, Munees and Saints preached us to serve the society. The idea of CSR first came up in 1953 when it became an academic topic in HR Bowen’s “Social Responsibilities of the Business”. Since then, there has been continuous debate on the concept and its implementation. Although the idea has been around for more than half a century, there is still no clear consensus over its definition. Post 1991, there is increasingly a receding role of the state in the economic and social sphere. An increasing acceptance of CSR by large number of corporate, post liberalization can thus be seen in the context of the larger role being consciously carved for the private sector in an economy which was earlier largely controlled and managed by the State. The corporate world is keen to exploit the opportunities that are being provided by the new economic outlook of the State. Today, 93% of the world’s largest 250 companies now publish annual corporate responsibility reports, almost 60% of which are independently audited.
Challenges Of Corporate Social ResponsibilityElijah Ezendu
Issues in development of workable corporate social responsibility strategy and resolution of awe-inspiring stance for championing effective governance.
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2. INTRODUCTION
CAPITAL
Fund employed in any business activity.
Most important factor for production.
No economic entity can function without capital.
Venture capital
Venture capital is significant innovation of 20th century. It is generally consider as
synonym of risky capital
Venture capital is a new financial service, the emergence of which wants towards
developing strategies to help a new class of new entrepreneurs to translate their
business ideas into realities.
3. What is Venture Capiatl?
Venture Capital is “equity support to fund a new concepts that involve a higher risk and
at the same time, have a high growth and profit.”
“Venture Capital is broadly implies an investment of long term, equity finance in high
risk projects with high rewards possibilities.”
4.
5. Stages in venture capital
1. Seed Money:
Low level financing needed to prove a new idea.
2. Start-up:
Early stage firms that need funding for expenses associated with marketing and product
development.
3. First-Round:
Early sales and manufacturing funds.
4. Second-Round:
Working capital for early stage companies that are selling product, but not yet turning a profit.
5. Third-Round:
Also called Mezzanine financing, this is expansion money for a newly profitable company
6. Fourth-Round:
Also called bridge financing, it is intended to finance the "going public process”
6. ROLES WITHIN A VENTURE CAPITAL
FIRM
1. Venture capital general partners: Also known in this case as "venture capitalists" or "VCs" are
the executives in the firm.
2. Limited partners: Investors in venture capital funds are known as limited partners.
3. Venture partners: Venture partners "bring in deals" and receive income only on deals they work
on.
4. Entrepreneur in residence: EIRs are experts in a particular domain and perform due diligence
on potential deals. EIRs are engaged by VC firms Some EIR's move on to roles such as Chief
Technology Officer (CTO) at a portfolio company
7. FEATURES OF VENTURE CAPITAL
The main features of venture capital are:
Long-time horizon: In general, venture capital undertakings take a longer time say, 5-10 years at a
minimum to come out commercially successful; one should, thus, be able to wait patiently for the
outcome of the venture.
Lack of liquidity: Since the project is expected to run at start-up stage for several years, liquidity
may be a greater problem.
High risk: The risk of the project is associated with management, product and operations.
High-tech: However, a venture capitalist looks not only for high-technology but the
innovativeness through which the project can succeed.
Equity participation and capital gains: A venture capitalist invests his money in terms of equity.
He does not look for any dividend or other benefits, but when the project commercially succeeds,
then he can enjoy the capital gain which is his main benefit.
Participation in management: Unlike the traditional financier or banker, the venture capitalist can
provide managerial expertise to entrepreneurs besides money.
8. Advantages of Venture Capital
Economy
oriented
Investor Entrepreneur
Oriented oriented
9. ADVANTAGES OF VENTURE
CAPITAL
Economy Oriented-
Helps in industrialization of the country
Helps in the technological development of the country
Generates employment
Helps in developing entrepreneurial skills
Investor oriented-
Benefit to the investor is that they are invited to invest only after company starts earning profit,
so the risk is less and healthy growth of capital market is entrusted.
Profit to venture capital companies.
Helps them to employ their idle funds into productive avenues.
10. Entrepreneur oriented-
Finance - The venture capitalist injects long-term equity finance, which provides a solid capital
base for future growth.
Business Partner - The venture capitalist is a business partner, sharing the risks and rewards.
Mentoring –
Alliances - The venture capitalist also has a network of contacts in many areas that can add
value to the company
Facilitation of Exit - The venture capitalist is experienced in the process of preparing a company for
an initial public offering (IPO) and facilitating in trade sales.
11. Methods of venture capital
equity
Conditional loan
Income note
Other financing method
12. Process of venture capital
• Deal origination
1 • Screening
• evaluation(due diligence)
2 • Deal structuring
• Post investment activity
3 • Exist plan