Venture Capitals who provide their own Iunds to the entrepreneurs to start the business are

known as Angels. The capital that they provide is known as "Angel Capital". It is an inIormal
venture capital.
Venture Capitals who pool money through the High-Net Worth Individuals (HNIs), Iinancial
institutions, pension Iunds and other Iund managers and help to set up the business is actually
known as a 'Formal Venture Capital. The Iunds that are pooled are known as are called VC
Funds.
Venture Capitals not only provide capital but also other mentoring and other services which are
beneIicial to the entrepreneur in starting and running the business successIully. ThereIore in
industry they say that VCs provide "Smart Money".
Activities oI Venture Capitalists:
1. 8tabli8ment of Fund: Here they establish the Iund by creating the entity which
will pool the investor Iunds and then carry on other activities.
. Seeking Inve8tor8: A PPM (Private Placement Memorandum) is prepared and the
potential investors are contacted. This PPM is almost same as IPO prospectus Ior
companies to raise capital through equity. Here, the VC Iirms present their
investment plans and returns to be expected. The Iunds are kept open, and once
any Iirm or institution agrees to invest, they must legally bind. Once the desired
amount required is reached the Iund closes.
3. Inve8ting and Calling Commitment8: Here the VCs start investing in the ventures
and as per the obligations set the investors who were ready Ior investment start
investing.
4. Monitoring: As the VC Iunds have obligation to their investors regarding the
returns assured and also the sum assured, they keep a close monitoring and
evaluating objectives over the ventures they have invested.
5. it8: Once they Iind that the ventures they had invested in have given them the
returns they expected they encourage the entrepreneur to go public by IPO. Here
they sell-oII their shares through 'open-oIIers. The amount collected through
selling oI the stake are then distributed to their investors who had invested in the
VC Fund.