1. RISING OF FUND & VENTURE CAPITAL
Manjula Rajput
Assistant Professor
Shri Shankaracharya Mahavidyalaya Junwani Bhilai
2. RAISING OF FUNDS
An entrepreneur after taking decision to
establish his enterprise has to assess the
financial requirements. He also take steps to
raise the necessary funds to run the
enterprise. In this chapter it is planned to
discuss the strategies to rise the necessary
funds for the enterprise.
3. NEED FOR FUNDS
Fixed Assets
Current Assets
Promotion Expenses
Company Organisation
Cost of Financing
Intangible Assets
5. VENTURE CAPITAL
These are the set of investors who place big
bets. Venture capital is a professionally
managed fund and deployed in hyper-
growing companies with enormous potential.
A venture capitalist invests in equity and
looks for harvesting within 3-5 years’ time
frame. Such investors bring much more on
the table that funds which include corporate
governance, PR, network and senior
leadership to the company.
6. Businesses that do not have a hyper-growth
do not usually excite these set of investors,
and they choose to invest in companies with
proven business models only. Venture capital
is also the riskiest money, and thus the
investors like to take a significant share of
the pie in the business against their
investments.
7. such investments are risky as they are
illiquid, but are capable of giving impressive
returns if invested in the right venture. The
returns to the venture capitalists depend
upon the growth of the company. Venture
capitalists have the power to influence major
decisions of the companies they are
investing in as it is their money at stake.
8. CHARACTERISTICS OF VENTURE CAPITAL
High Risk
Equity Debt-Financing
Long Term Investment
Participation in management
Creative Capital
Professional Entrepreneur
New Technology
9.
10. TYPES OF VENTURE CAPITAL
Types of Venture Capitalists Generally, there are three
types of organized or institutional venture capital funds –
i. Venture capital funds set up by angel investors, that is,
high network individual investors
ii. Venture capital subsidiaries of corporations - these are
established by major corporations; commercial bank
holding companies and other financial institutions
iii. Private capital firms/funds-The primary institutional
source of venture capital is a venture capital firm venture
capitalists take high risks by investing in an early stage
company with little or no history and they expect a higher
return for their high-risk equity investments in the venture
11. METHODS OF VENTURE CAPITAL FINANCING
Equity
participating debentures
conditional loan
12. The venture capital funding process typically
involves four phases in the company’s
development:
Idea generation
Start-up
Ramp up
Exit
13. STEPS OF RISK/VENTURE CAPITAL
Seed stage
Start-up stage
Early stage (also called first stage or second
stage capital)
Expansion stage (also called second stage
or third stage capital)
Bridge stage (also called mezzanine or pre-
IPO stage)
14. SOURCE OF VENTUR CAPITAL
All India Level Venture Capital Fund
State- level Venture Capital Fund
Specific Venture Capital Fund
15. ALL INDIA LEVEL VENTURE CAPITAL FUND
ICICI Venture Capital Fund Management
Company limited
IFCI venture Capital fund limited
IDBI venture capital fund limited
CANBank capital fund limited
16. STATE- LEVEL VENTURE CAPITAL FUND
Gujarat venture Capital fund
Tamilnadu venture Capital fund
17. SPECIFIC VENTURE CAPITAL FUND
India Investment fund (India appropriation
fund)
Credit Capital venture fund limited
Industrial Development and information
company limited
18. ADVANTAGES OF VENTURE CAPITAL
They bring wealth and expertise to the
company
Large sum of equity finance can be provided
The business does not stand the obligation
to repay the money
In addition to capital, it provides valuable
information, resources, technical assistance
to make a business successful
19. DISADVANTAGES OF VENTURE CAPITAL
As the investors become part owners, the
autonomy and control of the founder is lost
It is a lengthy and complex process
It is an uncertain form of financing
Benefit from such financing can be realized
in long run only
20. DOCUMENTATION REQUIRED
COPY OF PROVISIONAL Registration Certificate
Copy of application for an industrial shed to establish the
unit in his own permission
Copy of application for license under the industries act
Copy of sanction of power connection
Copy of the feasibility report
Proof of promoters contribution
Details of financial requirements
Proof of location of the unit
An undertaking or assurance that the necessary
permission from the concerned authorities have been or
would be granted to establish the project.
21. CONCLUSION:
Considering the high risk involved in the
venture capital investments complimenting
the high returns expected, one should do a
thorough study of the project being
considered, weighing the risk return ratio
expected. One needs to do the homework
both on the Venture Capital being targeted
and on the business requirements.
22. REFERENCE
Dr. O.P. Gupta
https://www.edupristine.com/blog/venture-
capital
Fundamentals of Entrepreneurship Sahitya
bhawan publication
