INFORMAL RISK CAPITAL AND VENTURE CAPITAL

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Informal investment- main sources are angel investors, informal investors, private investors. A business angel is a private individual who is willing to invest his own capital or atleast a part of his assets, and his personal entrepreneurial know-how into new or existing, unquoted SMEs in exchange for stocks.

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Corporate angels Enthusiast angels Entrepreneurial angels Micromanagement angels Professional angels

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venture capital is an important sources of finance for small and medium sized firms which have very few avenues for raising funds.

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For new entrant Continuous involvement Mode of investment Long-term capital Hands-on approach High risk- return venture Source of finance Liquidity

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High-risk and high-return financing focus on new ideas economic growth catalyst role Capital support Vast scientific and technical power Employment generation

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Critical factors Frame work Flexibility Institutional Global exposure infrastructure

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Deal origination Screening Due diligence
Preliminary evaluation Detailed evaluation

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Deal structuring Post- investment activities Exit

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venture capitalists comprise of professionals of various funds. venture capitalists are High risk investors. A venture capitalist is a person or investment firm that makes venture investment and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments.

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Explain why the business idea works or why the product has potential through a face-to- face meeting. Know the product inside and out. Differentiate the offering from what is already on the market. Determine how the product or idea has the potential to create a new market trend. Make professional contact with the venture capital firm. Develop an airtight business plan. Find the right kind of venture capital firm. Know the range of how much financial assistance these firms would invest.

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